Double whammy ‘will destroy solar co-ops’

Solar panel installers say the government’s roll-back of subsidies and tax relief for community energy is jeopardising the future of solar co-operatives.

In August the Department of Energy and Climate Change proposed to cut the feed-in tariff (FiT) by 87%, from 12.4p to 1.6p, taking effect from January 2016. And last month the Treasury announced proposals to remove Enterprise Investment Scheme (EIS) tax relief for new investors in community energy, beginning after November 30.

Adrian Arbib of the Bristol Area Solar Installers Co-operative (BASIC) said these changes in combination would make it impossible for solar installation co-ops to trade.

“It will absolutely destroy solar PV,” he says. “It’s an out-and-out attack on community energy and co-operative values.”

BASIC is a co-operative consortium, formed by eight specialist solar installer co-ops in Greater Bristol – 1World Solar, Ecocetera, EvoEnergy, R-Eco, Solarsense, Southern Solar, Suka Solar and Your Power. It bids for large-scale solar projects and multiple installations and pools buying power to reduce costs.

Mr Arbib’s worker co-op, R-Eco, employs up to 15 people and has seven regular staff, but Mr Arbib says the future is uncertain.

“It’s been a difficult time,” he says. “Margins are really tight. In six months time I’ve no idea what I’m going to be doing.

“I might have to uproot and go to France. A lot of skilled, talented people will be leaving. I’m angry. We’ve put a lot of time, effort and love into this business.”

The consortium’s other member co-ops have also been affected. “Southern Solar has folded,” says Mr Arbib. “There are companies folding already. The ones that are left have got six-month plans.”

The Solar Trade Association (STA) estimates that up to 27,000 of the 35,000 people working in the solar energy industry could lose their jobs due to the proposed cuts to the FiT alone. The South East would be the worst affected with over 4,000 solar jobs at risk. The North West is also heavily affected, with 3,500 of its 4,300 solar jobs threatened. At least four major solar installation companies went bust last month.

Paul Barwell, chief executive of the STA, said the Government’s proposals for FiTs favour southern England and discriminate against much of the rest of the country.

“The Government has used sunlight levels you might find in Devon, rather than those found in Yorkshire as they have done in the past,” he said.

“We believe more than just one corner of the country should be able to get the benefits of going solar. The Government’s short-term thinking on bills is condemning hardworking families to a future of higher energy costs.”

Until now the calculations have been based on average sunlight levels in Sheffield – roughly the middle of the country – and the STA says the Government should revert to this.

New research published last month by Community Energy England (CEE) revealed that 90% of community energy projects in the pipeline, including wind, hydro and solar schemes, are at least partially at risk due to the proposed cuts to the FiT.

CEE’s report, Community Energy: Generating More than Renewable Energy, reveals that of 80 organisations surveyed, 55 reported projects in development, but only five were certain to go ahead. CEE says this represents £127m of investment in community-owned renewables which will probably not happen.

It estimates that, so far, community energy has raised £28m in community shares and generated £23m for community benefit funds. It has leveraged £50m in private investment and mobilised 155,000 volunteer hours valued at £5m.

Development manager of Energy4All, Paul Phare, said that for community energy share offers already underway, it was now a race against time. These schemes will not be affected by proposed changes to the FiT as they have been pre-accredited by Ofgem and their tariff rates are locked.

But he is advising potential investors to put their money down this month to ensure they benefit from tax relief and ensure projects go ahead.

“People just aren’t putting their money in,” said Mr Phare. “It’s very uncertain.

“For example we’re involved in Edinburgh Community Solar Co-operative, which is trying to raise £1.4m. The money’s not coming in as quickly as we’d like.

“We’ve only got a month until EIS gets pulled. We’re concerned that if we don’t raise the money by then we won’t raise it at all.”

Edinburgh Community Solar Co-op, which aims to install solar on 25 public buildings, has raised more than £100,000 since it launched on September 29, but it needs another £1.3m.

If fully subscribed, the scheme will offer 5% return, plus EIS tax relief of 30%, delivering a return of around 7%, depending on investors’ circumstances. Chair Richard Dixon said: “We’re encouraging investors to commit now before the EIS window is closed. Anyone in the UK can buy shares and become a member.

“If we look across the country, we can see that investing in community co-operatives has proved very popular, with individuals or households typically buying around four thousand shares or more. In each offer, the primary purpose is to create a local community benefit.

“In Edinburgh, any surplus profit the co-op generates from the scheme will go towards a community benefit fund which will support new low carbon projects across the city.

“I’d encourage anyone with an interest in investing in the solar co-op to visit our web site and download the share offer document. Time is certainly of the essence.”

Bristol Energy Co-operative is in a similar situation. It plans a 4.2MW solar farm near Avonmouth, a 4.6MW ground-mounted project near Puriton in Somerset and 500kW of rooftop installations throughout the city. So far it has raised £95,000 of its £2.8m target. The projected return on investments is 5%, rising to 7% including EIS tax relief.

Other live community energy share offers looking for investment include Exeter Community Energy, Pomona Solar Co-operative and the Broad Raine weir hydro project.

Many community energy schemes have already been affected by the Government’s roll-back of support. Already this month, Repower Balcombe, a bencom which has planning permission for a 18,500 panel solar farm at Chiddinglye Farm, East Grinstead, has announced that this can no longer go ahead under community ownership. The scheme will instead be owned by a developer.

Abingdon Community Hydro in Oxfordshire and the Mapledurham Community Anerobic Digestion project near Reading also folded this month.

Many more projects are at risk. St John’s church in Old Trafford, Manchester, have used community solar to fund a food bank and support local allotments. Its plans to work with a local housing association on measures to address fuel poverty are now looking uncertain.

Alice Bell of climate change charity 10:10, which supports Repower Balcombe and other community energy bencoms, says: “Community energy isn’t a hobby. It’s a vibrant, thriving sector that has the potential to really shake up how we own and engage with energy in the UK. It’s more than pulling its weight, and it had massive plans which are now under threat.”