The last few months have seen a rapid increase in the number of renewable energy firms falling into administration and liquidation.
This is said to be due to the loss of grants for businesses in the renewable energy sector. Here, we will take a look at two prominent businesses that have become insolvent since these governmental changes were made.
Crouchland Biogas moves to administration
Based in Dunsfold, Surrey, Crouchland Biogas has been using an anaerobic digestion plant to produce energy since 2010.
Since the plant was set up, it has produced approximately 106 Giga Watt hours of electricity. This is enough power to heat more than 100,000 British homes.
However, despite this success, the company was forced to appoint administrators on 7th August 2017.
Crouchland Biogas will continue to trade while the company's financial position is evaluated "in the interest of creditors".
Both the administrators and company spokespeople state that changes in the funding/feed-in tariff system for the renewable energy sector are behind the company's slide into insolvency.
When these changes occurred at the same time as the pricing declines in the wholesale electricity market, pressure on the company's cashflow became "unsustainable" under its current structure.
Liquidation of Lark Energy
Documents filed at Companies House on 17 July show that Renewables Solar (UK), formerly known as Lark Energy, appointed PKF Cooper Parry as its voluntary liquidator, therefore initiating a CVL.
The associated companies Renewables Solar (UK) Construction, Renewables Solar (UK) Commercial, and Barnby Moor have also filed for liquidation.
All 28 employees at the four firms have lost their jobs and it seems unlikely that the $48.6m owed to creditors will be paid.
Again, changes to the government's feed-in tariff scheme for renewable energy companies were blamed for the company's financial state:
“Renewables Solar (UK) was a market leader in the renewable energy sector. However, unfortunately, like many other companies in the sector, it was a victim of the changes the government made to feed-in tariffs in 2015, which had a major impact on the industry.”
Tyrone Courtman, partner and head of PKF Cooper Parry's business restructuring, recovery and insolvency team.
What changes were made to feed-in tariffs?
In February 2016, the government cut solar subsidies from 12,47p per kilowatt hour to 4.39p/kWh. This meant that homeowners, who are paid for every unit of electricity their domestic panels generate through a feed-in tariff, had far fewer incentives to opt for a solar installation.
This move came after the government highlighted concerns that the £7.6bn budget for renewables would be drastically overspent. It was argued that solar and onshore wind projects should be largely self-sufficient.
Since these changes were made, several renewable energy providers have fallen into administration or liquidation, as they often relied on these subsidised rates to generate business.