A couple of years ago, I reported on the experiences of a solar homeowner in England, and I was curious how the situation in Britain has evolved since then. Alex Hole, owner of Strenson Solar, a British firm which provides solar panels in Sussex, recently approached me and I invited him to write the following guest post. I can’t vouch for what he reports, but I did find it interesting, since many states and cities in the U.S. are scaling back their subsidies, too.

I set up my solar panel company in the U.K. after researching the alternative energy market for some time and coming to the conclusion that photovoltaic energy solutions can help homeowners have a far cheaper (and cleaner) source of energy. The thought that the U.K. government was also encouraging early adopter of solar technology through a system of generous tariffs also made entering this new industry an attractive prospect.

Over the years I have tried to keep up-to-date with how other nations’ governments encourage the solar industry in their countries. There are certainly some telling similarities and differences in approaches to solar—not least between the U.K. and the U.S. I always try and read Ernst & Young’s quarterly reports about the state-of-play in the world’s renewable energy markets and noted that the February 2012 edition pointed out that the solar industry in the U.S. faces a considerable challenge. Despite 2011 being a bumper year for solar, the Solar Renewable Energy Credit system (whereby clean energy production certificates are sold, traded, or bartered) has reached saturation point and looks set to depress prices in the short-term.

Here in the U.K., there are also challenges that need to be overcome if progress with encouraging homes and businesses to invest in solar panels is to continue. We don’t have a Solar Renewable Energy Credit System (SREC) in the U.K., but we do have the feed-in-tariff (FiT) model—a form of subsidising the solar industry that is currently a source of tension between the solar industry and the government.

The FiT system is designed to ensure that householders who have solar panels installed get paid for the electricity they produce through the green technology; regardless of whether they use the energy in their home or export it back to the national grid. This system was introduced when Gordon Brown was Prime Minister and was seen as a way of rewarding Brits who became early-adopters of solar panels. The rate was set at 41.3p (about 65 American cents) for every kilowatt-hour of clean energy produced and resulted in a large number of solar panels springing up on U.K. roofs. The scheme was so popular that the solar industry thrived—giving companies the capacity to reduce costs.

With the solar industry growing stronger, the UK government was keen that solar companies should absorb more of the costs of encouraging green homeowners. A consultation between the government and the solar industry was set up to discuss the idea of reducing the feed-in-tariff—an idea which solar companies acknowledged had to happen. And this is when the trouble really began.

Eleven days before the consultation was due to end, the government, without warning, announced that the FiT would be halved from December 2012. The solar industry was given just one month’s notice of the change and struggled to cope with a ‘gold rush’ of customers who looked to cash in on the old FiT rates before the new, lower ones were applied.

After the gold rush, there was, inevitably, a sharp falling-off in solar panel orders. Two solar power companies teamed up with environmental group Friends of the Earth and went to the High Courts to successfully challenge the government’s right to slash the tariffs before the end of the consultation period. The government appealed the verdict and in the confusion solar companies were unable to advise prospective new customers which tariff they would benefit from.

With the U.K. government launching a second appeal, confusion still reigns. If the U.S. and other countries have anything to learn from the U.K. example it is this: solar industries and customers need plenty of warning and clarity regarding decisions to change solar power grants and subsidies.

Despite this, the Ernst & Young report shows that in 2011 the U.K. overtook Italy to become the fifth highest-ranked nation in terms of attractiveness for investment in renewable energy. We have some way to go before we can catch up with the U.S. (in second place) or China (first place), but no one expects to see the UK shooting up the global solar charts until the current legal dispute is settled.

Image courtesy of Alex Hole