After weeks of anticipation the Department of Energy and Climate Change (DECC) has today published the results of the latest solar feed-in tariff consultation. From August 1 the new rate for 4kW systems will be 16p/kWh, set in line with current installation figures.

With installed prices now more than 50 percent lower than in April 2010 when the FiT was first introduced, the latest tariffs are aimed at providing the same returns as originally set out.

Speaking in the House of Commons this afternoon the Minister of State, Greg Barker announced a range of alterations to the existing feed-in tariff (FiT) scheme. The UK solar industry will now benefit from a less complex degression management model, which includes smaller quarterly degressions linked to market deployment. This differs from the existing system, which offers an automatic degression.

As expected the new tariffs [seen below] will go ahead from August 1, one month later than originally planned. After noting lower-than-expected installation rates the Department decided to hold off on cutting the tariff until the market begins to pick up.

The tariff for a domestic solar installation will now be 16p/kWh, down from 21p, and will be set to decrease on a three-month basis by 3.5 percent thereafter. These degressions are expected to be delayed if the market slows down. Uptake will be viewed in three different bands (domestic (size 0-10kW), small commercial (10-50kW) and large commercial (above 50kW and standalone installations). Quarterly reductions will be determined within those bands.

The new tariffs, which will now be paid over 20 years instead of 25 years, should give a return on investment (ROIs) of over 6 percent for most typical, well-sited installations, and up to 8 percent for the larger bands.

Investor income will also be boosted by the increase in the export tariff, which will increase to 4.5p from 3.1p. This will be particularly beneficial for large-scale solar investors, who will be able to add the export tariff to the feed-in tariff in order to generate a reasonable return on investment. All tariffs will continue to be index-linked in line with the Retail Price Index (RPI).

DECC also revealed that organisations with more than 25 solar PV installations will get 90 percent of the standard applicable tariff, increased from the 80 percent proposed in February. This increase reflects new evidence heard on costs involved for these projects.

Although reduced, the new rates are aimed at kick-starting the UK solar market, with an aim of installation at least 800MW in 2012/13. In fact, DECC expects that these rates to provide the resources for the UK to achieve 800MWp to 1,000MWp each year to 2015, with an extended ambition for 22GW for 2020. These figures account for solar capacity to be installed in each year than the original FiT budget offered over five years, reflecting the strong growth the industry achieved in 2011.

These figures do not include larger projects that are now able to use two ROCs; it is suggested there could be a further 300-600MWp installed under this mechanism before April 2013.

“Today starts a new and exciting chapter for the solar industry. The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing today provide a strong, sustainable foundation for growth for the solar sector,” Barker commented.

“We can now look with confidence to a future for solar which will see it go from a small cottage industry, anticipated under the previous scheme, to playing a significant part in Britain’s clean energy economy.

“I want to send a very clear message today. UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence.”

Alan Aldridge, Chairman of the Solar Trade Association said: “We broadly welcome many of the Government’s decisions for how solar PV will be treated in the FITs scheme and wholeheartedly welcome the inclusion of Solar in DECC’s updated Renewables Roadmap; this should reassure consumers and solar companies alike that the Government recognises and stands behind a major role for the solar industry.

“Despite the currently slow market, the industry can have some confidence that the new Tariffs are tight but workable. Householders should be reassured the new Tariffs will provide more attractive returns than can be found elsewhere today. The STA is now keen to work with Government to get this positive message out.”

The Minister also announced plans brought forward by Cornwall Council and the Building Research Establishment to set up a National Solar Centre in Cornwall.

Cllr Alec Robertson, Leader of Cornwall Council said: “The FiTs scheme allowed many people across Cornwall to learn about renewable energy, especially solar power, and Cornwall would welcome the establishment of a new National Solar Centre that  will be at the heart of the bright future for PV in the UK. We’re pleased that DECC has announced changes that improve the predictability for the FiTs scheme”

Although many areas of today’s news will inject an element of confidence into the UK solar market there are still some areas that are expected to cause concern. There is a fear that the August 1 cuts could continue to stall uptake, and that DECC has not accounted for this issue fully within the consultation.

Originally posted on Solar Power Portal.

Solarbuzz, the market research group which focuses on solar photovoltaic (pv) has released its UK pv market 2010 report and highlights strong growth potential for the year ahead. Indicating the link between the market and the feed-in tariff legislation, Solarbuzz predict that 2011 will see a surge in solar pv installation as investors look to tap into the government’s tariff scheme.

With a focus on such factors as market segmentation, market size and tariff rates the report has highlighted the continuing growth of the infant solar pv market in the UK. Alan Turner of Solarbuzz said,

“The early entrance of big name brands are helping to lend public confidence to what is generally a poorly understood renewable energy source in the UK,”

The Solarbuzz market report has highlighted the following trends for solar pv:

• The south east accounts for 45 per cent of residential solar pv installations in the US
• 2011 solar pv figures will be hugely impacted by emerging agricultural and industrial projects
• Big name brands entering the solar pv market will easily meet the growing demand for solar installations

Conservative Party Leader David Cameron and probable next British prime minister come 2010, has reaffirmed his commitment to green issues by issuing a statement declaring his support for feed-in tariffs as a mechanism for encouraging the growth of renewable industries.

In a document released from the Conservative Party, authored by Cameron and titled The Green Consumer Revolution, the leader of the opposition outlined a 5 point approach to tackling climate change. Key to these points is the adoption of a series of incentives designed to spark investment in solar energy uptake by off-setting the obvious costs involved in the purchasing and installation of solar technology.

Feed-in tariffs operate on the basis that small scale renewable energy producers are offered fixed, premium rates for the energy fed back in to the national grid. The legislation obliges utility companies to purchase the energy from the small scale suppliers over a period of years, therefore offering investors returns on their initial investments on solar plant.

David Cameron used the German solar feed-in tariff example to demonstrate the effectiveness of tariffs as a means of provoking investment and installation, stating,

“Take the issue of people generating their own energy. The reason why Germany is so far ahead of us is because they have a system of what they call feed-in tariffs. That means people who generate their own energy sell it back into the national grid. That way, they can earn money as well as reducing their bills.

In addition he commented,

“We should be equally bold here. Two years ago we announced that a future Conservative Government would introduce a similar system of feed-in tariffs to Britain. And to make sure the system works, we will also give every house a smart meter so the amount of energy they are selling back to the grid can be calculated and they know how much electricity they are generating themselves”.

In the document, Cameron followed in the footsteps of Barack Obama and political rival, Gordon Brown by asserting the potential of green energy as a means of revitalizing the current stagnant economy. Both Brown and Obama used the term ‘Green New Deal’ drawing parallels with the initiatives introduced by Roosevelt as remedies to the Great Depression with Cameron asserting,

“It’s a triple win. It will create a new competitive market in energy efficiency worth at least £2.5 billion a year. It will create over 70,000 skilled jobs. And it will save an estimated 9.4 million tonnes of carbon”.