Industry unfazed by tariff reduction

Today’s reduction in the Feed-in Tariff (FiT) for PV should not detract from the bigger picture, say members of the industry.

Despite domestic FiT rates falling from 21p/kWh to 16p/kWh, the message remains the same that system costs continue to fall and electricity prices are likely to increase leaving the economic benefits of installing PV unchanged.

Dr Chris Jardine,  technical director at Joju Solar, said: “The Feed-in Tariff is becoming a smaller and smaller proportion of the benefits of a solar system. Increasingly, the value of solar comes from not importing electricity from one of the big suppliers at rates that are just going to go up and up is where the real benefit lies.

“Therefore, the cuts in Feed-in Tariffs although they grab headlines, are actually masking the real story which is that there are remarkable savings to be made from putting solar on your roof. Solar PV, particularly for many companies, is the cheapest way of supplying electricity to a building.”

Robert Goss,  ConergyUK’s md, said: “Unlike last year, where big tariff reductions encouraged booms in solar installations, the 1 August reduction has had less impact. Whether this is down to consumers being more cautious, tighter lending from the banks, or because payback times are only being postponed by a year or so, remains to be seen.

“The bigger picture is that in the current market, the Government’s 22GW target for solar can not be met with feed-in-tariffs alone. Where daytime power generation offers instant returns, such as on office roofs, factories, in schools and hospitals, the business case is already strong. For large scale projects, the coalition should seek to resolve its differences on ROCs to avoid the boom-and-bust we had with feed-in-tariffs.”

Tomas Freyman, Valuations Director and renewable energy specialist at BDO LLP, added: “The latest reduction in the solar Feed in Tariffs (FIT) allows us to think about renewable energy in its wider context. FITs have delivered more than 1 GW of solar photovoltaic (largely residential) over the last two years, and have shown that there is a market for investments based on energy users becoming energy generators. That is indeed a great testament to the UK energy user.

“Solar photovoltaic, whether its residential or commercial, however, is still unlikely to occupy more than a niche position in the energy sector as a whole even if investors and developers are still able to generate adequate returns. It is no surprise that the tariffs have come down; they are doing so broadly in line with capital costs. The full intention of these subsidies is to get the market started and, in time, they will no longer be needed as levelized costs of renewable energy meet those for fossil fuels.”