HC 1605 Energy and Climate Change and Environmental Audit CommitteesWritten evidence submitted by The Electrical Contractors’ Association
About the ECA
The Electrical Contractors’ Association is the UK’s largest trade association representing electrical engineering and contracting companies. The industry has an aggregate turnover of over £5 billion and employs around 350,000 operatives and 8,000 apprentices. Our 3,000 members range from local electricians to national companies with several branches employing thousands. ECA members carry out a range of work ranging from domestic heating, lighting and photovoltaic (PV) installation, and installing cutting edge, environmental control technology on buildings such as Heathrow Terminal 5.
1. The ECA is greatly concerned about current and future harm to the PV installation sector as a result of the hasty and dramatic reduction of Feed-in Tariffs announced in recent DECC consultation. The DECC consultation has already caused considerable market confusion. The nature of the announcement and the speed of the proposed implementation have severely damaged the credibility of Government-supported green energy initiatives.
2. The Feed- in tariffs for PV panels introduced in 2010 provided a much needed boost to construction industry jobs and activity, while also providing a widely accessible means of helping to reduce UK carbon emissions, and publicizing the carbon reduction agenda to consumers. Many thousands of jobs have been created and statistics provided by DECC in their consultation show the full extent of the industry.
3. At the initial announcement of FITs there was the proviso that they would be reduced as the industry matured and the cost of PV installations dropped. As such, it was widely recognized that the current 43.3p/kwh level (for small installations on existing domestic premises) would be pared back in the medium to long term. A review was announced in 2011, but it was not expected to apply to new FITs until after April 2012.
4. The current lead up to the DECC consultation was, to put it bluntly, a shambles. We note that the Energy Savings Trust (EST) actually published an announcement about the reduced tariffs and other plans, the day before the official consultation document was issued. DECC quickly issued a note to say that the EST document was “inaccurate” but in virtually every respect the EST information was highly accurate. EST’s document was hastily withdrawn, due apparently to “technical problems”. Then, the DECC consultation document set a closure date for comments which is after the implementation date of the planned lower rates – a key issue subject to the consultation. This seems highly prejudicial and its practical effects on the sector, and possibly its customer base, have been both immediate and negative. We understand that the consultation process is currently being challenged in the courts by various third parties.
5. The ECA believes that the rushed implementation and drastic reduction of tariff levels will severely harm a sector of the construction industry which, for the main part, comprises SME and micro-businesses. The sector responded to FITs by creating jobs and wealth which have been of environmental, social and economic value to the UK, including the Treasury.
6. For investment in green technology to occur, both in capital and labour, businesses need reasonable certainty and continuity. We would like to see as an outcome from this committee a process for better providing the various green technology sectors, and notably the PV sector, with conditions which will support business planning, a consultation regime based on adequate notice, and no implementation dates before consultation on those dates finishes. Government consultation is a not new phenomenon, and there seems no justifiable reason for the situation we have been presented with.
7. The present DECC consultation has caused utter dismay in some parts of the PV installation sector, which has been in the vanguard of creating the very jobs that Government says it wants to see. The negative impacts on investors, start-ups and other small businesses, and even potential customers, is likely to be longer term, and not restricted to PV installation. For example, it may damage confidence in the Renewable Heat Incentive and other forthcoming green initiatives.
8. We are also greatly concerned about the proposal to link FITs to as yet untried energy efficiency requirements, including the forthcoming Green Deal. These added requirements, added to a greatly reduced FIT, could have a very serious effect on consumer demand in 2012.
Please be advised that our assessment is that a level of 29p kWh for sub-4kw existing installations, to the end of 2012, would greatly reduce the FIT subsidies required, support the sector and crucially, ongoing customer demand.
9. We welcome the committee’s examination of this topic and we are ready to contribute further to this issue, as required.
22 November 2011