Review of Feed-in Tariffs for solar PV

The Feed-in Tariff (FiT) scheme was introduced in 2010 to encourage the use of renewable energy, especially solar photovoltaics (PV). Subsequent developments in the solar PV market have led to higher-than-anticipated uptake, but little impact being made on the drive towards zero-carbon buildings.

Current Position

In October 2011 DECC proposed changes to Feed-In Tariffs (FITs) for solar photovoltaics (PV). The consultation closed in December 2011 and proposed to cut feed-in tariffs for small-scale solar installations by over 50 per cent, from 43.3p per kWh of solar electricity to just 21p. The restrospective nature of the cut immediately led to a protracted legal battle between DECC and the solar industry. This has now reached the Supreme Court and is as yet unresolved.

Next Steps

B&ES felt that the level of decrease was justified on the basis that the original FIT was set at too high at an unsustainable level, particularly given that solar PV product prices have decreased significantly (by about 30%) since the introduction of FIT in April 2010.

What is particularly controversial, and unreasonable for B&ES members involved in the scheme, is the proposed timing for when the revised FIT would come into force. That date was 12 December – 11 days before the consultation ended, with the date itself open to change as part of the consultation. The consultation itself gave very little time for the industry to adjust and sent the wrong signals to potential investors, as well as raising concerns about other government-backed schemes like RHI and the Green Deal.

B&ES stressed this point in its response to the consultation and encouraged members to respond themselves.

DECC is now consulting on Comprehensive Review Phase 2B - Tariffs for non-PV technologies and scheme administration issues. The consultation closes on 26 April 2012 and seeks views on proposals to change the tariffs of the four non-PV tariffs (wind, hydro, anaerobic digestion and micro-CHP). It also covers proposals to carve out special arrangements for community projects, including greater tariff stability.

There is a further concurrent consultation from DECC which closes on 3 April 2012. In line with the evidence of reductions in costs associated with solar PV, DECC is proposing an ambitious programme of six monthly tariff reductions for solar PV tariffs, along with a review of export tariffs, and considering whether the Government should reduce the period for which solar PV tariffs should be applied, from 25 to 20 years.

The aim of these consultations is the introduction of a clear and transparent review process for FiTs in the future.

Contact

For more details e-mail David Frise