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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.

To read the full article, click here.

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

 

 

There is a growing degree of speculation in the industry regarding the feed-in tariff (FiT) review that is approaching towards the end of 2011. Due to the incredible importance of the tariff to your average solar energy installation, such debate is healthy and ensures awareness of its approach. Speculation however, is not quite as beneficial, so this article will evaluate the current situation and explain what is to be expected when the review is announced and brought about.

The Comprehensive Spending Review

The government carried out what they called a Comprehensive Spending Review in 2010 in order to take better control of government spending. The Comprehensive Consultation into the Feed-in Tariff was a part of this review, and is the official name for the solar FiT review. It is carried out to ensure that the funding being spent to promote the uptake of solar energy installations via the FiT is under control and at a manageable level.

Expectations

International experience has taught us a lot when it comes to government incentives for renewable energy installations, especially solar power on a micro-generation (>50kW) level. The most successful solar industries in the world of Germany, Spain and Japan are perfect examples of this and we can review their developments to aid our predictions. In all of these countries:

  1. FiT’s were introduced and subsidised by the government to bring in solar uptake;
  2. Reviews on the FiT’s were carried out on loose timelines to control the government’s spending;
  3. The FiT’s were reduced over time and via these reviews in order to stabilise growth.

So by this example we can make one point clear;

1) A reduction in the FiT is by far more likely to occur than an increase or a continuation.

The second aspect we must consider is the degree of reduction we could expect to see.  At this point, it looks likely that the UK’s FiT reviews will be flexibly carried out to ensure the government reduces their risk in over-spending via the Comprehensive Consultation they have established. Whilst we have a rough date in mind, we need to analyse the uptake figures for a better idea on when to expect the changes.

Installation Figures of Solar Energy in the UK

The timing of the review

The government has stated that a review will take place upon a certain budget for the FiT being reached or if we reach March 31, 2012. Looking at the current uptake figures being offered by the regulator for energy in the UK, Ofgem, we can expect to reach 550MW before March 2012. This would very likely be a number surpassing the government’s budget, and we can then loosely establish our second important point,

2) The FiT review is likely to be introduced after November 2011, but before the end of March 2012.

Whether changes are brought about immediately or postponed until April 1st, 2012 is uncertain and depends on the government’s perception of the uptake and budget. Here at Solar Selections all we suggest is for people to educate themselves on their options, ensure they understand the returns and benefits for the solar installation and then proceed as soon as they feel comfortable.

The scale of the review

The other important aspect of the review when it does come around is the scale of the reduction in the FiT to expect. The growth of the market here in the UK is not expected to be sustainable for another year, so reductions between certain percentages can be expected.

3) The FiT cuts could be in the vicinity of 25% to 40% of the current tariff levels.

Only a cut of this magnitude could stabilise the spending that is at the forefront of the governments concern. Whilst such reductions would be damaging to the growth of the industry, they do serve as incentive for people to consider their options now and sign up for the 25 year indexed to inflation rates on offer.

The most important consideration with these three conclusions is that time is of the essence. We here at Solar Selections do not condone the pressured selling tactics that can be used in the industry to make customers feel forced into a decision without doing research. We do want to ensure that as part of a potential solar energy customer’s education they learn that if the review is changed and the installation incomplete, the new tariffs will apply and that they are likely to be significantly less attractive than what is available now.

In Conclusion, once a project’s feasibility and interest is established, any further delays in the decision making process serve only to expose the project to the risk of lower tariffs.

To establish your project’s feasibility and your own knowledge and interest, get in touch with us today for free, intelligent advice.

For the full article, please click here

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: : 0844 567 9835

© Solar Selections Pty Ltd

British homeowners are benefiting from the reductions in Chinese wholesale solar prices. This has enabled many homes in the U.K to reduce their carbon emissions. Unfortunately the influx of cheap panels has also damaged the European solar producers who struggle to compete.

The price of PV (photo voltaic) solar panels has dropped by as much as a third this year alone. This has had a huge impact on the returns available for home owners turning to solar.And there is a boom at present as consumers try to install the low-cost equipment before the level of handouts via the government feed-in tariff (FIT) is reassessed in April next year.

Solar Century, a larger London-based supplier that also assembles PV equipment, says a large amount of its equipment is imported from China.Britain has come late to the solar party with government ministers preferring in the past to concentrate on wind power and only fairly recently trying to stimulate demand by offering subsidies to solar users.

This has meant PV manufacture has been concentrated in countries such as Germany and Spain where harnessing the power of the sun has been encouraged for many years.The US, and more recently China, have gradually latched on to the growing global market for solar and have been setting up factories in double-quick time.But the very low labour costs – and allegedly the very cheap finance available from state-owned institutions – has rapidly propelled China into pole position in the production of solar equipment.

The rapid build-up in capacity in the Far East is playing a major role in driving down the cost of panels, but it is also being blamed for a crisis at many German and particularly American rivals.Whatever the reason for solar manufacturers losing out, it should be easy to see a winner: the British homeowner. But it is also tough for consumers deciding which panels they should buy knowing any producer could out of business and shred any 25-year guarantee along with it.

 

WANT TO TAKE ADVANTAGE OF THE UK GOVERNMENT FEED-IN-TARIFF?

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INCOME WILL INCREASE WITH INFLATION

In the UK, the government’s feed-in-tariff increases in line with the Retail Price Index. In 2011 that figure is 4.7%, however in forecasts we use an average of 3%. At that rate the Year 25 asset yield would be 16.5% per annum.

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