A report compiled by PricewaterhouseCoopers for the Solar Trade Association (STA) has found that over 12,000 jobs in the solar industry have been cut in the last year, following cuts to subsidies.
PwC sourced the data by surveying 238 companies, representing around 10% of the solar industry in June prior to the EU referendum.
The report states that “concerns about solar investment will be exacerbated by the decision to leave the European Union and the expectation of a turbulent period of economic adjustment”. However, more importantly, it explains, many of the issues the solar industry faces currently were already present before the vote, and are down to longer term issues than those brought about by the recent referendum.
Currently, PwC reported, the UK’s solar capacity is increasing, but the industry itself (in terms of the number of companies, and the number of workers) is shrinking, as various subsidies are withdrawn and companies are forced to work out how to “adjust to a new stage in [the solar industry’s] development.”
Financial support offered to the solar industry by the government has been wound back in the past year, in a bid to try and balance what the report described as the “energy trilemma”; that is, balancing the three obligations of tackling climate change, securing energy supply, and making sure that energy remains affordable.
The report backs the need for a “holistic approach”, which is described as “essential if the UK is to meet these varied requirements”. The solar sector, then, must “prove it is resilient and can continue to make a major contribution” based on these three criteria.
The big target for the solar industry is grid parity – that is, parity of cost with other, more conventional power generators. It is the lack of grid parity that makes the case for reduction in subsidies based on raw value for money.
The government has previously said that cuts were made in order to save customers money, as subsidies are directly levied onto household energy bills, at a rate of around £10 per year.
The issue is largely one of timing – any growing industry like solar is likely to need a helping hand in order to become, and remain, successful and economically viable. Subsidies are required to get to this point, but not beyond – the question is of whether or not subsidies for solar have been withdrawn too early.
The solar industry experienced a huge boost in 2014, when capacity almost doubled over the year to reach 5 gigawatts. Now, capacity is at 10GW (though STA’s own figures put it at closer to 12GW). However, the report claims, “the rapid growth seen in 2014 and early last year will not be seen again under the current policy environment and while grid party remains out of reach.”
One major effect of the withdrawal of subsidies has been the loss of jobs across the sector.
As industry executive, Nick Boyle, head of Lightsource, explains: “Since the government U-turn, our hand has been forced to re-evaluate our strategy for both roof and ground mount installations, and this has had a direct impact on our team and internal resourcing requirements.”
“According to the STA’s calculations,” the report claims, “the figure for full industry job losses over the past year is likely to exceed 12,500.”
The drop, from 5,362 people employed a year ago to 3,665 now, represents a 32% reduction in total staff employed. Of these jobs, 81% “are UK facing”.
Looking forwards, 30% of companies surveyed said that they expected to be reducing their workforce even further in the coming year, while 50% said they expected no change and 20% expected their workforce to increase in size.
Laura Greene said, on behalf of the STA, that this report exemplified the need for government action in order to save the solar industry.
She said: “The survey shows very regrettable damage to the fabric of the British solar industry and the need for prompt government action.
“There are many good economic reasons to back the British solar including minimising the cost of decarbonising our power supply to retain competitiveness, while creating exceptionally large numbers of jobs.”
There have been questions raised about this current government’s commitment to tackling climate change, with Theresa May’s merging of the old Department for Energy and Climate Change and the Department for Business, Innovation and Skills being cited as a sign of reduced focus on environmental issues.
However, the PwC report says, the merger is not necessarily bad news, rather it may simply signal a new approach to environmental issues with business needs in mind. This may be working more towards the ‘holistic approach’ that they called for.
“Key policy decisions over the UK commitment to its carbon targets and how these will be achieved need to be made” the report said, adding that “The creation of the new Department fro Business, Energy and Industrial Strategy (BEIS) may be the catalyst to achieve this.”
