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Government confirms August start for revamped Feed-in Tarif

Paying dividends: From August 1 the export tariff will rise to 4.5p/kWh

The government has announced its long-awaited responses to the Feed-in Tariff (FiT) consultation bringing an end to months of uncertainty for the solar PV industry.

Energy minister Edward Davey has now served Parliament with the statutory 40 day notice period required to introduce FiT reductions from 1 August – a month later than was previously thought.

A decrease from 21p/kWh to 16p/kWh for domestic installations has been confirmed whilst the duration of the scheme will also change from 25 years to 20. The export tariff for energy sold to the National Grid will increase to 4.5p/kWh.

 

Although many installers have accepted the new rate and praised the Department of Energy and Climate Change (DECC) for finally making some firm decisions, a more mixed response seems to be the case for the new degression mechanism which will see a baseline reduction in FiT of 3.5 per cent every three months.

The exact percentage reduction will be dependant on deployment and could rise to as much as 28 per cent in the event of over deployment. In the opposite circumstances of low uptake, however, there is the ability to suspend any degression for two consecutive quarters. The next cut will be due on 01 November.

Photon Energy director, Jonathan Bates, said: “The new rates will provide a good return, proving that solar is still good for business. This latest announcement should make the situation much more stable, and it is now up to the industry to react and change the perception that the FIT scheme has ended.”

 

Chris Hopkins, managing director of Ploughcroft, said: “Although we had hoped that the government would hold the feed-in tariffs for 12 months, this announcement does provide greater clarity for both the solar industry and homeowners. Homeowners now have complete visibility in what the rate will be going forward, which we have never had before, and there is obviously an incentive to install sooner rather than later.”

 

Harry Shepherd-Cross, Ardenham Energy, said: “On balance, the changes are less toxic than we feared. In particular, the increase to the export tariff is a sensible move as it brings it in line with the wholesale market at no cost to the FiT budget. There is an obvious disconnect between the 800-1,000MW per annum that the new degressions are based on and the 2,500MW per annum required to meet the government’s 22GW target of solar PV by 2020.  We would like to see digressions based on a quarterly target consistent with that long-term aim.”

Pierre Cesbron, business development manager UK, REC Solar, added: “We consider the solar FiT cuts announcement and presented degression mechanism crucial to the long term development of the solar industry in the UK. Yet we are concerned by a subsidy reduction that does not allow business and the many working in this industry to have the long term visibility needed to allow the industry to grow in a sustainable way.”

 

Generation tariffs for new solar PV installations from 1 August 2012

 

Band (kW) Standard generation tariff (p/kWh) Multi-installation tariff (p/kWh) Lower tariff (if energy efficiency requirement not met) (p/kWh)
•4kW (new build) 16.0 14.4 7.1
•4kW (retrofit) 16.0 14.4 7.1
>4-10kW 14.5 13.05 7.1
>10-50kW 13.5 12.15 7.1
>50-100kW 11.5 10.35 7.1
>100-150kW 11.5 10.35 7.1
>150-250kW 11.0 9.9 7.1
>250kW-5MW 7.1 N/A N/A
stand-alone 7.1 N/A N/A

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