Yesterday saw an explosion in productivity at the rumor mill regarding the solar energy Feed-in Tariff (FiT) and it’s impending review. With sources from all over the industry and high exposure media such as Financial Times jumping on board the scaremongering bandwagon, let’s take stock once again and remember the facts of where we are up to.

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The Feed-in Tariff Review

As we understand it, the Comprehensive Spending Review championing the government’s budget overhaul into spending includes a review of the solar FiT. The Department of Energy and Climate Change (DECC) is the authority on this matter, and only their official release will bring about the changes and outline to what extent cuts will be made.

One thing that figures from Ofgem are highlighting is that installation rates are much higher than what they anticipated. The current rates cannot be sustained at this exponential growth level. The boom is most certainly in full swing, and the bust now appears to be approaching in all its foreboding and unstoppable glory.

“Unless Earlier Action is Deemed Necessary”

The DECC, in speaking with industry sources has released the following statement:

“As we’ve previously said, all tariffs in the scheme are being considered in the Comprehensive Review and we will be consulting on proposals later this year. We’ve made clear that tariffs will remain unchanged until April 2012 unless the review indicates the need for greater urgency. There has been no announcement about the review so any rumors about its content are just that, rumours and speculation.” (Source)

In simple terms, nothing has changed at this point and we are no closer to understanding exactly when they will. The media storm has cracked through the sky, but the underlying realities of our situation remain. There is little doubt that the review will decrease the FiT rate by some extent, and also increasingly less doubt that the changes will be brought about before April 2012.

The only concrete truths the industry has to offer are that if you’re installed prior to the changes you will receive an enviable rate on your solar power for many, many years. If you do not, you won’t.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: 0844 567 9835

© Solar Selections Pty Ltd 2011

Commenting on publication today of a safety review of the UK nuclear industry following the Fukushima crisis in Japan earlier this year, Friends of the Earth’s energy campaigner Tony Bosworth said:

“This report does nothing to alter the Alice-in-Wonderland economics of nuclear power – it’s a gamble we don’t need to take.

“After more than five decades of nuclear generation the industry still relies on huge public subsidy, while solar is set to operate without taxpayer support within a decade.

“Getting tough on energy waste and plugging in to the UK’s vast green power potential will meet our energy needs and build the new job and business opportunities our economy is crying out for.”

The Department of Energy and Climate Change (DECC) has today announced they will press ahead with their 1st August cut off date for large scale solar farms

Energy and Climate Change Minister Greg Barker said, “I want to drive an ambitious roll out of new green energy technologies in homes, communities and small businesses and the FiT scheme has a vital part to play in building a more decentralised energy economy.

“We have carefully considered the evidence that has been presented as part of the consultation and this has reinforced my conviction of the need to make changes as a matter of urgency. Without action the scheme would be overwhelmed. The new tariffs will ensure a sustained growth path for the solar industry while protecting the money for householders, small businesses and communities and will also further encourage the uptake of green electricity from anaerobic digestion.”

The new tariffs (below) will go ahead from August 1, 2011 and will apply to all new market entrants.

>50 kW – ≤ 150 kW Total Installed Capacity (TIC) - 19.0p/ kWh
>150 kW – ≤ 250 kW TIC – 15.0p/ kWh
250 kW – 5 MW TIC and stand-alone installations – 8.5p/ kWh

This effectively writes off large scale solar in the U.K. For a government that is attempting to be green this is a huge step backwards.

Greg Barker has ensured that for the same cost there will be less green energy produced. Here at solar feed in tariff we believe this is a terrible move for U.K policy.

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.”