Government says growth of solar power depends on market liberalisation

The UK's Minister for Energy, Helen Liddell, has told a solar power conference that the industry must operate in a liberalised market place and cannot expect large scale subsidies to help it compete with conventional sources of electricity.

The solar industry welcomed Liddell’s endorsement of a liberalised electricity market, but added that the photovoltaic (pv) industry must get more government support if it is ever to make a genuine contribution to the UK’s attempts to reduce carbon emissions.

“We need liberalised, competitive markets that reflect true costs and give consumers real choice. Only then can we hope to see increasing demand and decreasing costs become reality and the possibility of a sustainable future,” Liddell told the 16th European Photovoltaics Conference in Glasgow. “Here in the UK we have taken the lead in market liberalisation. I do not believe that large scale subsidy is the answer, though clearly subsidy has a role to play.”

But Bernard McNeilis, chairman of the British Photovoltaic Association (PV UK) told edie that the industry needs more support. “Renewable energy needs more than liberalisation, it need positive support and pv would need extra special support. It’s a new energy source, it’s expensive and it’s at the same stage that the nuclear industry was 50 years ago. Without positive support it won’t grow.”

In her speech, Liddell also reminded her audience that the UK Government has exempted renewables from the Climate Change Levy (see related story) and reduced VAT on professionally installed solar panels to five per cent.

Liddell added that the Utilities Bill will introduce an obligation on electricity suppliers to secure a minimum proportion of supplies from renewable sources, expected to be around 10% (see related story). She also said that there has been a very substantial increase in our R&D expenditure, £5 million of which has been allocated to pv over the next three years (see related story).

Although he welcomed such support, McNeilis told edie that such measures were not enough to prevent conventionally-generated electricity becoming cheaper in relation to renewables. “I’m all for liberalisation. It has reduced the price of conventionally-generated electricity, but has widened the gap between conventional and renewable sources, which makes it harder for renewables to compete. There are hidden subsidies in conventional electricity, especially for nuclear, and you can’t compete with that without support.

“The 10% target for renewable electricity is also very good, but there is a danger that electricity suppliers will source from the least costly types of renewable energy, such as energy from waste and landfill gas. At the moment there is very little funding for R&D, and no support for market development of PV. The figure for R&D should be 10 times higher, and market development funds don’t exist at all.”

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