HC 1605 Energy and Climate Change and Environmental Audit CommitteesWritten evidence submitted by The British Retail Consortium
Introduction
1, The British Retail Consortium (BRC) is the trade association for the UK’s retail sector and is the authoritative voice of the industry to policy makers and to the media. The BRC brings together the whole range of retailers across the UK, from independents to large multiples and department stores, selling a wide selection of products through centre of town, out of town, rural and online stores.
2. Retailers have put the environment, sustainability and energy efficiency at the heart of their operations and have invested considerable time and resources in this work, as well as engaging their staff\and customers on these issues. The BRC’s climate change initiative “A Better Retailing Climate” is testament to the work that has, and continues to take place across the sector. For information on this initiative, please follow the link below.
Summary
4. Investment in energy generation is, by definition, a long term issue, requiring significant resources upfront, with savings and benefits being realised in the future. To encourage businesses and the consumer to recognise the long term benefits, policies need to be clear, simple and stable. Stability is arguably the most important theme in this debate and will affect the success, or otherwise, of all policy instruments across the environment and climate change policy arena.
5. It is for this reason the BRC is particularly disappointed the Government has decided to make changes to the Solar PV Feed-in Tariff in the way the consultation proposes. The BRC is understanding of the reasons behind making changes to Solar PV FITs. However the timeline change raises questions over the regulatory worth of a consultation and creates an unstable policy environment that undermines investments already made and confidence in making future investments for both retailers and their customers. From a better regulatory perspective if nothing else, this should be re-examined and considered by the Committee as an important line of questioning.
6. The Government has made a number of changes to its environmental policy over the past year which is having a significant impact on business confidence and ability to invest in environmental initiatives. Earlier this year, the Government made stringent changes to the financial elements of the Carbon Reduction Commitment, which transformed that initiative into a tax rather than a reputational incentive. This further change relating to energy efficiency continues to build on the damage done by the CRC decision and we would urge the Committee to consider the change to the Solar PV Feed-in Tariff within this context.
7. Specific Question Responses
(a) Impact to date of Solar PV Feed-in Tariffs and the state of the solar energy market
8. Feed-in tariffs have played an important role in stimulating the market for solar PV. They have generated a sufficient financial incentive for businesses and individuals to invest in the technology. The price of solar PV has reduced significantly and the solar energy market has grown despite the current economic situation.
9. (b) The balance between affordability and delivering the objectives of the Solar PV Feed-in Tariffs, including factors to consider when setting the rate of small-scale Feed-in-Tariffs including jobs created, emissions reductions and energy-saving behavioural change.
10. Feed-in-tariffs have aided the development of the solar PV market. The market has grown and jobs have been created. The Government should be proud of its successes in this area. Whilst we recognise that a balance must be struck between affordability and delivering against carbon emissions reduction targets, the Government must ensure that any action taken builds on current successes, rather than undermining progress to date. Policy changes with short timescales prevents businesses building in contingencies on investments already made and impacts on confidence and trust within the system.
11. The consultation document considers how the tariff can be amended so it can adapt to market changes. To ensure that the administrative burden is minimal and that the process is simple and consistent we would advise that one approach is applied to all technologies eligible for FITs.
12. (c) The way in which the Government has managed the Solar PV Feed-in-Tariff, the impact this has had to date, including the management of the Consultation.
13. The BRC realises changes need to be made to the FIT tariff. We understand that in light of the falling cost of solar PV the technology does not need the level of subsidy originally envisaged to be competitive. Therefore, we are not disputing this change at this stage.
14. The BRC’s concern with the consultation is the proposed changes to the timeline, which will have significant consequences for retailers. These are:
The decision impacts on retailers’ investments that have already been made in good faith.
It undermines the confidence to invest as businesses cannot guarantee government commitment will be honoured.
It directly affects customers and their trust in the renewable energy services they are being offered.
15. In addition, the new deadline, 12 December, is prior to the close of the consultation on 23 December. This irregularity gives the impression that the decision has already been made and undermines faith in any future consultation processes.
16. Furthermore this consultation document is part 1 of 2. Part 1 speaks about changes to the overall FIT picture however, it is unclear whether these issues will be discussed in greater detail in Part 2. To make the process less complicated the consultation should have been carried out all at once. It seems that Part 1 has been issued solely to change the deadline for installation of Solar PVs on the existing FIT and that will occur before the consultation closes.
17. The BRC and a range of other organisations have put these points to Government however, so far, responses have been disappointing. This seeming lack of recognition of the practical issues associated with the proposed changes is particularly concerning as it gives the impression that decisions have already been made, which does little to reassure potential investors that the policy framework will remain consistent.
18. Affordability of Solar Photovoltaic energy versus other renewable energy (given the overall levy-funded cap for energy bills) and the impact of Feed-in-Tariffs on energy bills.
19. The consultation proposes introducing a measure that would require a building to have achieved an EPC of level C or above before it becomes eligible for feed-in-tariffs. We agree that all energy saving measures should be applied prior to introducing additional measures. However, not all buildings can realistically reach level C of an EPC on energy efficiency measures. The requirement should only be introduced under the condition that a level C is achievable, or a list of relevant energy efficiency measures should be specified.
20. (e) Experience of similar incentive mechanisms for renewables in other countries
21. No comment
22 November 2011