With the government’s consultation on proposed cuts to the feed-in tariff drawing to a close, solar industry members are anxious to see how drastic changes to the tariff will be. Many involved within the UK solar industry are fearful that reductions in the solar tariff of up to 70 per cent for pv energy generators over 50MW. Whatever the nature of changes to the solar feed-in tariff mechanism, it is more than likely that the worst affected will be large scale installations such as the large scale solar farm sites which were looking to tap into tariff revenue.
The solar feed-in tariff works by guaranteeing fixed, premium rates for units of energy both used and fed-back into the grid by small scale pv generators. The government has made it clear that it would like to see households benefitting from this scheme rather that large scale projects. Indeed, smaller scale solar businesses have argued that this change is necessary to ensure that funding goes to those areas which most need capital. While this may be the case, other solar businesses have stressed vehemently that strong tariff support for larger scale projects is essential as it will be those projects whch drive the industry, bring costs down and of course put impetus on technological innovation.
Whatever the differentiation between small and large scale projects made by the Department of Energy and Climate Change (DECC), the essential fact is that reducing the feed-in tariff will harm the UK solar industry by significantly reducing investor confidence in solar projects. All previous research and experience from abroad has shown that a strong tariff system is needed in order to provide investors in solar pv with long term returns on investment protected by government legislation; where these tariffs fall by the wayside, investor confidence in ROI tends to as well. Many within the industry have therefore been lobbying the government incessently, trying to convince the DECC of the need to rethink proposed cuts. Leonnie Greene of the Renewable Energy Association stated that,
“Our view is that the overall ambition is much too low and the government clearly does not understand the strategic importance of solar. We are going back to a scenario where a few wealthy green home owners can install solar, when we want to be widening access to solar, particularly through community scale projects.”