Kim Mann, Krannich Solar, discusses the latest solar PV FiT rates for 1 April onwards and how the degression mechanism has evolved from foe to friend
I will admit that the phrase ‘FiT reduction’ still sends an involuntary shiver down my spine, as it invokes memories of the first drastic tariff cut and the industry turmoil it caused. With a little hindsight, however, I genuinely believe that the degression mechanism has, over time, become a positive influence and has contributed to us becoming a truly resilient and evolutionary industry.
For a long time, the main thing the PV market craved was stability and, in reality, the gradual and transparent FiT reduction mechanism is helping to provide just that. The PV lens is now firmly focussed on commercial solar and the freezing of the FiT for systems over 50kW from 1st April will no doubt encourage the continuation of this fledgling growth. Despite a noticeable increase in the average size of system we supply to installers, the 50-250kW roof-mounted market is still massively unfulfilled and holds tremendous opportunity for growth as business owners continue to realise the value PV can add to their bottom line.
The domestic market may not be in the spotlight much anymore but is still holding its own and, with grid energy prices forever on the rise and in the media, the 3.5% reduction in FiT for smaller-scale systems from 1st April is unlikely to have much negative impact, especially when you factor-in the increased export tariff. Perhaps I shouldn’t be surprised that our biggest customer continues to be one whose work is 100% domestic installation.
Overall, I believe that the gradual FiT reduction scheme, with market-related degression ‘freezes’ as and when required, is working and will continue to help the government progress towards its long-term goal of achieving grid parity through a stable and maturing renewables industry.
What about after grid parity, you may ask? Well, that’s another question for another day..!