The government announced its decision on the 31 October 2011 to halve the solar photovoltaic (PV) feed-in tariff (FIT) subsidy from 12 December 2011. A cut had been expected, since a stampede for solar panels had been created by the previous regime, indicating that the previous FIT was higher than necessary. Few expected it to be cut so dramatically, however, including Mears, and most expected implementation to be delayed until April 2012.
The Mears board responded to the FIT reduction by evaluating the business case for PV and has conclude that “the prudent course of action is to cease these activities immediately, as the commercial attractions that led us to explore the PV space, in the short term, no longer exist”.
Quitting this business will knock £2.8m of Mears’ operating profit this year. Also, the company is writing off £2.0m of costs relating to the site set-up, system design and installation that are now considered irrecoverable.
Chief executive David Miles said: "Whilst PV forms a very small part of our social housing activities, the government's recent proposals to reduce the PV feed in tariff are disappointing. Whilst I still consider the group to be extremely well placed to benefit from the opportunities relating to fuel poverty, it is unfortunate that we have wasted both time and resource in this area over the past six months.
"It is essential that solutions are found for the significant number of people living in fuel poverty within the social housing environment. The recent consultation proposal misses a tremendous opportunity to assist the most vulnerable; specifically, it disadvantages those individuals living in social homes. We will continue to strive to provide solutions to our customers and clients to address the challenges of fuel poverty. Mears remains well placed to make a difference in this important area.”