Solar Firms Going To The Wall
By Paul Homewood
h/t Dave Ward
Two renewable energy companies have closed in the wake of cuts to government subsidies which have dried up order books and driven firms into liquidation.
Eco Juice and Absolute Renewable Energy (UK), both based in Norwich, said they were forced to close after the government cut solar subsidies from 12,47p per kilowatt hour to 4.39p/kWh in February .
They claimed it meant homeowners, who are paid for every unit of electricity their domestic panels generate – known as a feed-in tariff – had fewer incentives to opt for a solar installation.
The move came after the government highlighted concerns the £7.6bn budget for renewables would be drastically overspent, and argued solar and onshore wind projects should largely be able to support themselves.
Absolute Renewable Energy (UK), based in Delft Way near Norwich airport, went into liquidation on February 17 after piling up debts of about £800,000, although around half of this was to its parent company, Avonside Group Services.
Liquidator Dean Watson, partner at Begbies Traynor Insolvency Practitioners, said the firm employed 25 people and also contracted about 40 self-employed sales people. “The firm got to the new year and the order book was drying up,” he said.
Eco Juice, founded five years ago, also ceased trading on February 17, citing lack of business as a result of the feed-in tariff. Director Peter Fleetwood said he was forced to let two workers go, but said solar panels were now a “hard sell” due to the government’s subsidy cuts.
Liquidator Jamie Playford, of Leading Corporate Recovery, said the company had accumulated creditors of about £43,000.
James Brabben, a lead analyst at Norwich-based Cornwall Energy, said people who had built businesses on the previous rates were struggling.
But he said there was more solar installed in 2015 than the previous three years in total, adding: “People have said this is a victim of its own success. So much solar was put out they had to control the costs.”
The Solar Trade Association said although there had been an 80pc reduction in solar panel installations since last February, the market was evolving with new ideas including solar set-ups with home battery systems, enabling consumers to reduce their dependence on the grid.
It is sad when any business goes under and employees lose their jobs. But unfortunately the solar industry in the UK never was a sustainable one, relying wholly on government subsidies to be viable.
Under the old system households with solar panels (or the firms that installed them) received a “generation tariff” of 12.88 pence/KWh, index linked, for every unit of electricity produced. For a typical 4KW operation, this would total about £450 pa, each year for 20 years. This cost is then passed on electricity bills for all users.
The government now propose to phase this generation tariff, which currently stands at 4.39/KWh, out by 2019.
These are just two firms in Norwich, but it is a situation that must be repeating itself all over the country.