Originally published 24 September 2010

There has been some speculation that the FITs for solar pv could be reduced before 2013. On making our own enquiries it is safe to say that the position is not at all clear. There have been quite contradictory messages sent and it should not be assumed that a reduction is definitely going to happen. Having said that, DECC's response is not helpful. DECC has said that it will not clarify the position until after the comprehensive spending review on 20 October.

Any change to the FIT regime would not only be significantly detrimental to the UK solar industry which has been hugely successful in galvanising itself and securing the investment required. The Spanish situation is a good example of what could happen. It could also, in our view, have a damaging effect on the renewable energy industry as a whole. Investors in UK renewable energy need certainty now more than ever and any change to a recently introduced regime is very likely to cause wide spread concern amongst developers including utilities and those who fund them. Companies investing in the UK always have a choice as to where to invest their capital and in simple terms they will invest where they can achieve the highest return for the least risk. Any change to the solar FIT could clearly cause the UK to be seen as too risky an environment within which to invest.

DECC needs to be mindful of the fact that this uncertainty, even if it is eventually resolved in favour of the current FIT levels, may still cause some damage because the seed of doubt has been sown. Early clarity on this would be preferable.

The Treasury also needs to carefully consider the impact of a successful UK solar industry not only in terms of jobs but also in terms of the potential taxable profits and income which will be generated.

We will provide an update as soon as we receive further information.

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