Small-scale Solar Sector

Energy and Climate Change – in the House of Commons at 9:30 am on 7th January 2016.

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Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham 9:30 am, 7th January 2016

What recent steps she has taken to support the small-scale solar sector.

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

Solar is an enormous UK success story that this Government continue to support. As my right hon. Friend the Prime Minister said yesterday, 98% of all solar deployment has taken place since 2010. In December, we announced that the feed-in tariff scheme would remain open and continue to support small-scale solar up to a value of £35 million of subsidy, potentially delivering an additional 1.2 GW across 220,000 installations by 2019.

Photo of Daniel Kawczynski Daniel Kawczynski Conservative, Shrewsbury and Atcham

I thank my hon. Friend for that answer. I had the opportunity recently to meet a company in the solar sector industry in my constituency, ESP Energy in Dorrington, and I was very impressed with its technology, innovation and job creation. Will my hon. Friend assure me that the Government will do everything possible to continue supporting this very important energy source?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

As my hon. Friend will know, it is a key priority to keep consumer bills down, so there must always be a balance between supporting a superb UK industry and making sure that consumer bills remain affordable. We will continue to support the further growth of the sector, but not at any price. The changes we have made to the feed-in tariffs seek to maintain the solar industry, which in the medium term can continue to reduce its costs and therefore move towards a subsidy free deployment.

Photo of David Hanson David Hanson Labour, Delyn

Will the Minister update the House on what steps she is taking to ensure that the rate of VAT on solar installations does not rise, as proposed, from 5% to 20%, which could add £900 to an average solar installation?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

The right hon. Gentleman is exactly right to raise that very important point. He will know that it is the result of proceedings by the European Commission, which believes that our VAT rates on solar installation should be higher. Her Majesty’s Revenue and Customs is looking closely into the issue and consulting on it. Once we have taken into account the outcome of that consultation, we will have to look further at the regime.

Photo of Huw Merriman Huw Merriman Conservative, Bexhill and Battle

My constituency has a number of thriving solar businesses, some of which I have worked with during the recent changes to feed-in tariffs. As the Government look to the industry to expand, and in response to a query from Solar UK in Battle, will the Minister explain how she will support the development of energy storage solutions for existing and future solar systems?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

My hon. Friend is exactly right to point out the huge potential for energy storage to enhance the value of solar PV installations. My Department has provided more than £18 million of innovation support since 2012, to develop and demonstrate a range of energy storage technologies. We are also investigating the potential barriers to the deployment of energy storage, focusing in the first instance on removing regulatory barriers, and we plan to hold a call for evidence on that specific area this spring.

Photo of John Pugh John Pugh Liberal Democrat Spokesperson (Education)

The Minister is in danger of sounding complacent on this subject. Many small and medium-sized enterprises in my constituency fear the end of solar. Has she had a chance to consider the Solar Trade Association’s £1 rescue scheme, and what is her response to it?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

As my right hon. Friend the Secretary of State and I have made clear on so many occasions, there is a fine balance. As the costs of a new technology come down, as they very much have in the excellent UK solar industry, so we must focus on the need for people in this country to be able to afford their energy bills. Fuel poverty is an enormous problem, but we do not want to over-subsidise, so it is a fine balance. We think that our response to the consultation in December provides that fine balance: giving a 5% investment return to solar installations is fair to consumers and fair to the industry.

Photo of James Heappey James Heappey Conservative, Wells

EU minimum import prices on Chinese, Taiwanese and Malaysian photovoltaic cells inflate the cost of an average solar installation by £385. The Minister is working to extract the UK from that, but will she update the House on her progress and set a date by which she hopes to end these price controls?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

I certainly agree with my hon. Friend that the MIP is an unwelcome drain on the UK solar industry. My right hon. Friend the Secretary of State made that point in her letter to the Trade Commissioner in November. I also agree that it would be fairer and simpler to remove the MIP while the current expiry review is under way. Unfortunately, however, the decision to launch an expiry review is one for the Commission, not for member states. Anti-dumping and anti-subsidy regulations require the Commission to maintain existing trade defence measures while the expiry review takes place, so it could be some months yet.

Photo of Clive Lewis Clive Lewis Shadow Minister (Energy and Climate Change)

Last year, the Solar Trade Association estimated that 27,000 workers would lose their jobs as a result of the Government’s proposed 87% cut to the feed-in tariff. Following a public outcry, including from Members on both sides of this House, the Department reduced the cut to 64%, saving about 8,000 jobs. I am sure the Minister would like to take the credit for that, but what is her message to the remaining 19,000 solar workers who face redundancy this coming year as a result of the tariff cut?

Photo of Andrea Leadsom Andrea Leadsom The Minister of State, Department of Energy and Climate Change

UK solar is a huge success story. It has grown rapidly since 2010, with enormous support from energy consumers in the UK. As we have said time and again, there is a balance. We absolutely welcome the jobs and growth that have been provided in the sector, but we cannot continue to support jobs just through bill payer subsidies. That would not be fair. Our measures will ensure that there is good potential for the industry to continue to grow and for jobs to continue to be supported, while at the same time making sure bills remain affordable.