SmartestEnergy has urged the government to close the gap between Feed-in Tariff (FiT) rates for domestic and commercial scale solar projects.
In its response to the Department of Energy and Climate Change’s (DECC) consultation on solar PV tariffs, the company argues that a single rate for all sizes of project would provide the best environment for long term investment in the sector.
The company, the UK’s leading purchaser of electricity from the independent generation sector, said the new rates for smaller installations which came in with effect from today are now “more realistic” given the fall seen in manufacturing costs for the technology.
Although SmartestEnergy’s consultation response criticises the implementation of the cuts to smaller scale schemes before the end of the consultation period, it believes the greater parity between domestic and commercial rates is a positive step.
“Different rates for domestic and commercial solar projects are unjustified as the technology used is largely the same regardless of the size of a project and the potential for economies of scale is limited,” pointed out Colin Prestwich, head of regulation at SmartestEnergy which is a leading participant in the FiT scheme.
“We strongly support solar technologies and believe they have the potential to play an important role to play in helping the UK move to a low carbon economy. But having significantly different rates threatens to limit overall investment in the sector and slow the growth of renewables in the UK.”
SmartestEnergy believes a single rate for all solar installations should be considered with a suggested figure in the region of 15-19p – in line with that implied by the assessment of current costs in the government’s fast-track review of FiT rates earlier this year.
“We believe a single rate at that level would encourage a healthy balance of investment between domestic and commercial scale systems.”
Under the latest changes the tariff for solar PV schemes of up to 4kW has been cut from 43.3p/kWh to 21p/kWh, from 37.8p/kWh to 16.8p/kWh for those from 4kW to 10kW and from 32.9p/kWh to 15.2p/kWh for schemes from 10kW to 50kW.
The rate for the largest schemes – of over 250kW – will stay at the 8.5p/kWh level introduced in the fast-track review of the tariffs earlier in the year.
Although SmartestEnergy’s consultation response welcomes greater parity on rates it also warns over the impact on investor confidence of both the government’s “constant tinkering with rates” and its decision to change the rates for domestic solar before the end of the consultation period.