Bad news is brewing for the solar industry in the UK. Rumors that the government will be cutting some of its funding to subsidize solar thermal appear to be true, as evidenced by comments made recently by Energy Secretary Amber Rudd. The Secretary has been saying for a while that residential and commercial heat based on renewable sources is a priority for policymakers, but exactly what kind of priority she is talking about is questionable.
Guidance published by the UK government indicates that support for the Renewable Heat Incentive (RHI) program will be drastically cut or eliminated by 2017. That would mean subsidies offered to property owners designed to encourage them to use solar thermal technologies for space heating and hot water will no longer be available.
Proposals included in the guidance are a matter of both consternation and confusion. The consternation comes from the fact that cutting the RHI program will probably reduce confidence in the solar thermal sector to such a degree that private investment might be negatively impacted. If that were the case, it would be awfully difficult to continue development of new technologies in the future.
As for the confusion, it stems from one simple reality: solar thermal is the most established and proven platform for renewable space heat and hot water around the world. Total capacity right now stands at 350 GW, far greater than total capacity for PV. Adding to the confusion is the reality that the UK has led the charge for solar thermal from the onset. Seeing them cut support for RHI now does not add up.
Deciding How Long Subsidies Should Last
Proponents of the UK guidance say that it’s hard to determine how long government subsidies should actually last. But they insist the RHI program was never intended to be permanent. The program was initially instituted to help the country achieve rather ambitious renewable energy goals put in place years ago. Now that it is apparent they are nowhere near reaching those objectives lawmakers may determine they could spend the money on the program on more important things.
How the solar thermal sector in the UK will fare if RHI is indeed cut remains to be seen. We imagine there will be a period of adjustment as manufacturers, installers, and service providers get used to the lack of subsidized funding. But we also believe the industry will survive. Property owners genuinely looking for renewable energy projects will still consider solar thermal in light of the tremendous savings it offers. More than one will choose to install solar thermal when it comes time to replace an aging boiler.
Subsidies Only a Partial Solution
Let us assume the UK does cut the RHI program in 2017. Such a decision could influence other countries to follow suit, especially where solar thermal is enjoying widespread adoption. It might even have a ripple effect here in North America. Already we are seeing some states and local jurisdictions begin to second-guess their subsidy programs in light of the need to tighten budgets. The question is, can solar thermal stand on its own?
Here at Solar America Solutions, we believe it can. There are now enough existing applications using our patented SunQuest 250® solar thermal collectors around the country to provide proof that solar thermal is an excellent alternative for renewable space heat and hot water. Growth may be slower in the absence of subsidies, but it will not be stopped. From our perspective, solar thermal is a renewable technology that is here to stay. We expect it to be the market leader before too long.
- Renewable Energy Magazine – http://www.renewableenergymagazine.com/article/uk-solar-industry-condemns-government-proposal-to-20160304