Deep cuts to feed-in tariff would put 10,000 jobs at risk

Over 10,000 jobs will have been created by April 2012 as a direct result of the government's feed-in tariff support scheme for renewable energy generators, research published later today will say.

Another 50,000 will be generated by 2015 if the government sticks to the current feed-in tariff rates following its forthcoming review of incentives, according to the new research from solar company Engensa.

"We see at least 10,000 jobs by April 2012 and even conservative forecasts of growth put that up to 18,000 jobs by April 2013," Toby Darbyshire, Engensa's chief executive, told BusinessGreen. "And this is in a market where 2.5 million are unemployed and 750 jobs created at Land Rover is front page news."

The former Bain and Co analyst has also calculated the average cost per household of the feed-in tariff is just 19p a month, well short of the huge sums quoted in a number of newspapers.

Moreover, Darbyshire says the Treasury will be £65m in the black after two years of the scheme, after weighing its tax receipts and revenue from all the jobs created against its spend on the tariffs.

"It's interesting that actually you have an extraordinary job creation success story, you have a net positive short-term impact to the Treasury, and we're talking about 0.4 per cent of what we're being told by the Daily Mail is being added to bills is actually being added to bills," Darbyshire argued. "This is a really useful way of spending a very small amount of money."

Critics have claimed that the incentives are an expensive means of cutting carbon emissions and that the jobs created will disappear as soon as the subsidies are removed, but Darbyshire gives this stance short shrift.

"That is a very legitimate argument if you believe the subsidies are [something like] £500 per year for a family," he said. "But actually when you see the Treasury benefiting, you see a transition towards a sustainable economy in an environmental sense ... it's very hard to make the argument this is a bad thing."

He said the government should avoid cutting tariff rates too deeply when it launches its review of the scheme early next year, arguing that the company's analysis shows that cuts of over 25 per cent would have a huge negative impact on the industry.

"Let's assume the government cuts the feed-in tariff by 30 per cent and threatens 10,000 jobs," Darbyshire said. "10,000 jobs at threat because homeowners have to pay £2 a year to bring green energy into homes is not a good headline."

Earlier this month, the European Photovoltaic Industry Association predicted electricity produced by UK solar would reach cost parity with conventional power sources before the end of the decade.

But despite the falling cost of solar panels, Dr Toby Ferenczi, Engensa's chief technology officer, argued incentives were still necessary to help reduce associated costs, such as installation.

"The industry has done our bit to decrease the cost of solar much more than originally anticipated. And that decrease looks set to continue," he said. "But you can't just keep waiting for the price of solar panels to fall. You have to give the industry that kick-start to help it to reduce those [other] costs."