New FITs tariffs could be postponed until March

20th January 2012


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IEMA

Reduced payments for small-scale solar under the feed-in tariff (FIT) will only affect panels installed from 3 March if the government loses its legal battle to implement changes earlier.

In a bid to provide greater clarity over subsidies for home-scale solar power, energy secretary Chris Huhne has confirmed the new lower tariffs to be applied from 1 April and announced plans to apply them to panels fitted from 3 March.

The new proposed eligibility date will come into play if the Court of Appeal refuses to overturn a High Court ruling that the government could not impose a tariff cut on arrays fitted before the consultation into the new levels of payment had closed.

In the controversial consultation, which closed on 23 December, DECC proposed cutting payments for small solar installations by up to 55% and to apply the new tariffs to all eligible installations fitted from 12 December.

In written statement to parliament, Huhne confirmed that DECC stood by its original proposal, but acknowledged that while the legal case continued the industry had been left in a difficult state of uncertainty, with companies unable to explain to potential customers what level of payments they could expect.

As a result, Huhne has published DECC’s decision on the new levels of tariff from 1 April, which are the same as those outlined in the consultation, ahead of the rest of the consultation findings and confirmed that, if unsuccessful in its appeal, DECC will apply the new tariffs to installations fitted from 3 March.

Energy minister Greg Barker followed the announcement with a statement reiterating DECC’s belief that allowing installations fitted from 12 December to retain the higher tariff after 1 April will risk the financial viability of the FIT scheme.

“We must reduce the level of FITs for solar panels as quickly as possible to protect consumer bills and to avoid busting the whole FIT budget,” he said. “We are still pressing ahead with our appeal and if successful, we retain the option of introducing a December reference date. In the circumstances we believe this gives the industry as much clarity as possible. And it puts us in a better position to protect the budget for everyone involved.”

The announcement has been welcomed from many in the solar sector, with representatives from organisations involved in the legal case saying it was an important step.

Friends of the Earth’s executive director Andy Atkins said: “At last the government is taking steps to sort out some of the uncertainty that's crippling a thriving UK industry – planned cuts will at last allow solar firms to start planning for the future.”

Meanwhile, Seb Berry, head of public affairs at Solar Century, said that DECC’s decision would help to restore some certainty to the market, but only in the short term.

“The elephant in the room for all FIT technologies, remains the government's decision to impose an unrealistic cap on the FIT scheme in 2010. Until that fundamental issue is addressed what we have is no more than a temporary, albeit welcome, step forwards.”

The budget for the FIT is capped under Treasury rules related to the amount of funds can be generated from levies on consumer bills. While DECC has confirmed it has been able to increase the funds available to the FIT scheme by shifting cash allocated to the Renewables Obligation, the overall spending cap remains in place.

There also remain concerns over the government’s proposal to restrict eligibility to the FIT scheme to homes that have an energy performance rating of C and above – a move that would restrict the market to approximately 15% of the UK’s housing stock.

DECC is to publish the rest of its conclusions following the consultation on 9 February when it also plans to release a set of reform proposals for the next review phase of the FITs scheme.


FIT tariffs from 1 April

Band (kW declared net capacity (DNC)

Current generation tariff (p/kWh)

New generation tariff from 1 April 2012 (p/kWh)

≤4kW (new build)

37.8

21.0

≤4kW (retrofit)

43.3

21.0

>4-10kW

37.8

16.8

>10-50kW

32.9

15.2

>50-100kW

19

12.9

>100-150kW

19

12.9

>150-250kW

15

12.9

>250kW-5MW

8.5

8.5

stand alone

8.5

8.5

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