Having recently completed the country’s largest solar farm in Leicestershire, it is understandable that Lark Energy feels the UK solar PV industry is currently buoyant. But could this be about to change? In this viewpoint, Jonathan Selwyn, Managing Director of Lark Energy, explains why the boom in solar PV is in danger of being brought to a sudden and almost complete stop…
In a year when the sun waited until the Glastonbury Festival before putting in a serious appearance, it may be surprising to discover that solar PV is the energy production system of greatest interest to farmers as they find ways to diversify and maximise the potential of their land holdings.
In harvesting energy, not crops, farmers are at the forefront of an agricultural revolution driven as much by the quest to reduce their energy costs as for the lure of a quarterly payment based on the Feed-in Tariff. And while the tariff has proved subject to change as government policy has proved inconsistent, and the sun is a perennial variable, farming is characterised by natural and market uncertainties and as an industry is accustomed to lean years as well as fat.
Farmers are also coming under significant pressure from their customers. The leading supermarkets in particular are keen to reduce their supply chain carbon footprint and procure food and produce in a more sustainable way.
According to Farmers Weekly, 76% of farmers believe that renewable energy generation could play a greater role in the future of their businesses. A survey by the journal carried out in May shows that 38% of a sample 700 farmers questioned have already embraced renewables, with solar PV the choice of two out of three, more than wind and biomass combined. And of those not yet involved, 61% said they were likely to invest in one kind of energy technology within five years.
Our own experience bears this out. We have seen a significant increase in enquiries from farmers over the past year – they understand energy costs, and they understand government subsidy and incentives, very much acting as a ‘bellwether’ in this market.
Solar farms are big business in every sense. The country’s largest, at a former World War II airfield in Leicestershire, was recently completed by Lark Energy. The £35 million 33MW solar project at Wymeswold Airfield, near Loughborough, includes around 130,000 of the panels typically seen on domestic roofs, covering 150 acres. We have planning permission for a further five sites, totalling 100MW, including a 35MW farm in Broxted, Suffolk.
Despite the recent changes in tariffs, the UK solar PV industry is established and buoyant. Across the country, some 300,000 homes, together with large industrial and agricultural buildings, are directly enjoying the benefits of solar power, with numerous newly-developed solar parks powering thousands of other homes and businesses in their vicinity.
Commercial roof-mounted PV has also seen a revival. We have just completed a 250kWp PV installation on a cold store in Nottinghamshire, another 150kWp on a cold store in Lincolnshire, and are soon to start on a total of 500kWp on farms in Suffolk.
The boom in solar PV, especially the larger scale commercial applications and solar farms, is, however, in danger of being brought to a sudden and almost complete stop. The future of the industry, and the many thousands of jobs in the UK sector, has been put into question following the introduction of an emergency 11% tariff on all solar imports from China by the European Commission. This is an interim stage to a larger 47% tariff being introduced in August.
EU Trade Commissioner, Karel de Gucht, has taken this step despite the Commission members voting overwhelmingly against the introduction of tariffs in a recent vote: 18 of the 27 countries voted against, five abstained, and just four were in favour, including France and Italy. Although the original complaint about subsidies and dumping came from the German solar manufacturing industry, Germany was vehemently opposed to tariffs. Most European solar PV panel manufacturers were finding it increasingly difficult to compete with the Chinese imports.
As around eight per cent of total Chinese exports to Europe are solar-related, China has already retaliated to the tariffs, announcing anti-dumping and anti-subsidy probes into imports of European wine. Not inscrutable considering that Karel de Gucht is said to have a shareholding in an Italian vineyard. There is some brinkmanship here, with each side waiting to see who blinks first.
Most of the European solar development industry is dependent on the low prices that Chinese panels provide and will be desperate for a compromise to be reached before the higher tariff comes into force in August. The consequences of there not being a deal are dire: far from saving the European solar industry, it will stop it dead in the water threatening tens of thousands of jobs, and the reciprocal measures that China will take will impact on other industries and could escalate into a full-blown trade war which is not in Europe’s interests in the current economic climate.
Although it appears some Chinese manufacturers have been selling solar panels below cost, this is a reflection of the market not of any pre-determined strategy by China. The solar industry in Europe has grown fast in recent years, and China has been building its solar industry to meet that demand leading to economies of scale and significant price reductions. With European government subsidies being reduced in consequence; the market is now dependent on these falling prices.
Karel de Gucht said the tariffs are an “emergency measure to give life-saving oxygen to a business sector in Europe that is suffering badly. Our response is balanced, legal and justified,” he added. However, the European solar panel manufacturing industry is actually minute, employing between 6,000 and 8,000 people, compared to 250,000 throughout the European solar development industry.
Far from being a life-saver the measures are in danger of suffocating the growing solar market in Europe. The whole UK industry looks forward to common sense prevailing and the industry being able to enjoy a much needed semblance of stability in the coming months.
