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Second solar firm in two days goes bust, blaming Tory policy Second solar firm in two days goes bust, blaming UK government policy
(about 4 hours later)
Climate Energy, a company specialising in installing solar panels and home insulation, has been forced into liquidation - the second such business in as many days to collapse blaming government policies. The Department of Energy and Climate Change (Decc) has denied subsidy cuts were responsible for the collapse of two solar panel installers in as many days, blaming the company failures on “commercial decisions”.
Around 30 of the 128 staff have been immediately laid off by FTI Consulting, the professional services firm brought in to try to rescue Climate Energy and its subsidiaries which had revenues of £47m last year. Amid warnings of a crisis in the green energy sector following the failure of Mark Group and Climate Energy and a forecast that 20,000 solar jobs could eventually be threatened, the Decc defended aid cuts for solar and energy efficiency.
“The administrators are not in a position to trade the companies following the administration. However we are endeavouring to migrate the work in progress and orders to a potential purchaser,” said Andrew Johnson at FTI in a letter to homeowners using Climate Energy services. Related: Solar-panel installer goes into administration, costing 1,000 jobs
“All job losses are regrettable and we sympathise with those affected, but commercial decisions are a matter for the company concerned,” said a DECC spokesman. “Our priority is to keep bills as low as possible for hardworking families and businesses, and to build a long-term energy efficiency system that gives consumers value for money. We are protecting existing investment and billpayers, while reducing our emissions in the most cost-effective way,” he said.
However, the dramatic demise of two leading companies following a series of cuts, and proposals for more, brought a furious reaction from environmental and trade groups.
Friends of the Earth energy campaigner Alasdair Cameron said: “Government policy threatens over 20,000 UK solar jobs – with many more at risk in other green sectors. It seems the Treasury is happier to give sky-high subsidies to Chinese nuclear power than support British solar.
The renewable energy industry around the world is booming and costs are falling rapidly but the UK government seems to be stuck in the wrong century.”
Neil Marshall, chief executive of the National Insulation Association, called for urgent help from ministers to avoid further company closures, job cuts and loss of confidence. “While the government has outlined its intention to introduce a new long-term policy framework for energy efficiency, which we welcome, the insulation industry is currently in a state of crisis.”
After almost 1,000 redundancies on Wednesday at the Mark Group after it was forced to call in administrators from Deloitte amid mounting financial losses, solar panel and insulation installers Climate Energy also folded into administration, blaming government policies.
Related: UK solar firms going bust - what consumers need to knowRelated: UK solar firms going bust - what consumers need to know
A spokeswoman for the administrators said the company, which has offices in Bristol, Croydon and Motherwell as well as headquarters in Witham, Essex, said cuts in government subsidies were a “contributory factor” in Climate Energy’s demise. Around 30 of Climate Energy’s 128 staff have been immediately laid off by FTI Consulting, the professional services firm brought in to try to rescue the firm and its subsidiaries, which had revenues of £47m last year.
The move follows almost 1,000 redundancies on Wednesday at the Mark Group after it too was forced to call in administrators from Deloitte amid mounting financial losses. The administrators said the company, which has offices in Bristol, Croydon and Motherwell as well as headquarters in Witham, Essex, said solar subsidy cuts were a “contributory factor” in Climate Energy’s demise.
The Mark Group was until hours before its failure owned by the major US group, SunEdison, which passed the Leicester-based business on to its managers who immediately announced it insolvent. The Mark Group was, until hours before its failure, owned by the major US group SunEdison, which passed the Leicester-based business on to its managers who immediately announced it was insolvent.
Mark Babcock, vice-president of SunEdison’s residential and commercial business unit in Europe, pointedly blamed the government for Mark Group’s problems: “Given the latest changes and proposed changes to the feed-in tariff [subsidy regime], it is difficult to see this [Britain] as a viable market going forward.” Mark Babcock, vice-president of SunEdison’s residential and commercial business unit in Europe, pointedly blamed the government for Mark Group’s problems: “Given the latest changes and proposed changes to the feed-in tariff [subsidy regime], it is difficult to see [Britain] as a viable market going forward.”
In the months since the general election and the introduction of Amber Rudd, the secretary of state for energy and climate change, there has been a major change in policy direction. In the months since the general election and Amber Rudd taking over as secretary of state for energy and climate change, there has been a major change in policy direction.
Related: The nine green policies killed off by the Tory governmentRelated: The nine green policies killed off by the Tory government
A range of cuts have been made to wind and solar subsidies, with the latest being consultation on a proposed 87% cutting of financial aid. Rudd argues that continuing subsidies are no longer needed at past levels because technology costs have fallen and consumers need to be protected from higher energy bills. A range of cuts have been made to wind, solar and energy efficiency subsidies – the latest a consultation on a proposed 87% reduction in financial aid for householders installing solar panels. Rudd argues that continuing subsidies are no longer needed at past levels because technology costs have fallen while other consumers need to be protected from higher energy bills.
However, critics believe the attack is driven by George Osborne as part of a wider austerity policy and to please the many Conservative backbenchers who believe “green” power is expensive and unnecessary. Figures published by regulator Ofgem and other sources show the rate of solar subsidies for small-scale rooftop installations dropping from 41.3p per kilowatt hour in 2010 to a proposed level of 1.63p while costs have stagnated over the last 12 months. It would take 25 years for an investment in solar to pay back under the proposed new scheme which is under consultation for implementation in January, 2016.
But one Conservative MP David Warburton has called for a re-think on government plans, warning that the proposed cuts to subsidies are “draconian”. Critics believe the attack on subsidies is driven by the chancellor, George Osborne. as part of a wider austerity policy and as a means to please Conservative backbenchers who believe “green” power is expensive and unnecessary.
The representative for Somerton and Frome in Somerset said: “We know the solar industry fully expected some rationalisation, but a drop of up to 87% in subsidies overnight is draconian and more than I suspect the industry can bear. For rooftop solar projects, this would mean an 82% cut to the existing subsidy rate of 11p to 3.69p. This would be a disaster for community energy projects like these in Frome, which are putting power - literally - in the hands of local people.” Boris Johnson, the Conservative leadership hopeful, and a small number of other MPs have expressed disquiet about the cuts. On Thursday night, Tory MP David Warburton, described the proposed cuts as “draconian”.
The MP for Somerton and Frome said: “We know the solar industry fully expected some rationalisation, but a drop of up to 87% in subsidies overnight is draconian and more than I suspect the industry can bear.”