Dai Rees Managing Director, Greenearth Energy Ltd.

Greenearth Energy Ltd., design and installation engineers of a wide range of Renewable Energy technologies has been operating in Wales and the border counties since 2002. We have seen many grant aid and incentive schemes come and go – Clear Skies, The Low Carbon Building Programme, Major PV Demonstration Scheme, etc. All have helped the industry grow from fledgling to booming: from tens of friendly competitor companies to tens of thousands of people employed nationwide. The latest, Clean Energy Cashback Scheme (commonly known as the FIT) based on other European models, has been the biggest incentive to date, especially benefitting PV: more than 50,000 PV systems having been installed since it’s start in April 2010.

The scheme was set up to offer a return on investment (ROI) of about 8%, the level deemed necessary to stimulate general interest from the public. The tariff offered was to be reduced in the April of each year balancing the dropping PV prices, and maintaing the target ROI. Prices of PV modules have dropped rapidly in the last 18 months and the ROI has crept up to about 12% - 15%.

Following a Review last summer the government decided to reduce the FIT for PV systems greater than 50 kilowatt installed capacity. This was a deathblow - a healthily growing area of the industry stopped overnight at the end of July 2011.

The industry expected a reduction of the tariff. But the severity of the cut announced on 31st October and the speed with which it is being implemented is brutal: reducing the FIT for smaller PV systems by more than half on December 12th. The Solar Trade Association warned of the bubble being created last summer and asked for a gradual decrease in the FIT to prevent exactly what is happening now. They were ignored.

Since 31st October the phone at Greenearth Energy Ltd has not stopped ringing with people wanting PV systems installed before the new deadline. Our Domestic PV order books were full within a couple of days. Regrettably we have turned away many potential customers. Our Commercial PV order books were already full up to April; we have had to cancel many projects, running to £2m to £3m worth of work. The last few weeks have been chaotically busy: all our installation and admin staff working overtime, materials sourcing a huge challenge. The nationwide supply chain for PV modules, inverters and even basics like roof lead, is at breaking point due to the enormous unexpected demand.

While a sudden rush of work is welcome in the run up to Christmas, looking into the New Year the picture isn’t rosy. Now we employ 15 full time staff and up to 25 sub-contractors, double the size we were 12 months ago. The tariff changes are likely to set us back 12 months. We estimate 25% of our staff may have to be made redundant or work part-time. It is impossible to foresee demand in the New Year, so very difficult to plan ahead.

My personal concern is the apparent lack of understanding the government seems to have of the implications of its actions. The Renewables Industry is young, vibrant and provides jobs for thousands of people. It is one of the few industries growing rapidly within our ailing economy. It needs support and backing to continue doing this. Both the industry and it’s potential customers need stability and confidence to help move forward in a strong and progressive environment. Investors need to be sure that they can plan more than a month or two ahead. New business needs to know they can invest and employ with some level of assurance. The recent actions of DECC seem to show no understanding of this at all. If there is no clear indication from DECC that this isn’t going to be how they treat the industry going forward, investment will cease and many of the companies already involved will pull out.

Mr. Dai Rees
Managing Director, Greenearth Energy Ltd.