Solar sector still reeling over FIT

13th May 2011

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The government's fast-track review of the feed-in tariff scheme and its proposed changes were condemned as misjudged and disastrous at the launch of the UK Solar Summit yesterday (12 May 2011).

The mood was one of frustration and anger when representatives from across the solar energy industry in the UK and Europe gathered to discuss the impact of the review and the future of the sector.

Keynotes speaker Dr Alan Whitehead MP, chair of the Parliamentary Renewable and Sustainable Energy Group, called the proposed cuts to tariffs for solar photovoltaic (PV) installations a bad mistake that was the result of moves in the Treasury rather than the fear that solar farms were going to distort the intended role of FIT.

“Buried deep within the budget was a paragraph stating that the government would cap the cost of climate change policies funded through levies on energy bills, which includes the FIT scheme, the Renewables Obligation (RO) and the warm home incentive.

“This was then introduced as a control mechanism two weeks later with no consultation. This means that there is an overall spending cap of £11.8 billion until 2014-2015, the bulk of which will be spent on the RO.

“This also means that if DECC introduces any new levies defined by the Office of National Statistics as an indirect tax, like the FIT scheme, then it has to fund those policies from existing budget.”

It places a question mark against the proposed Energy Companies Obligation (ECO) under the Green Deal says Whitehead: “The only way that DECC would be able to fund the ECO would be to reduce the amount available to the FIT Scheme, the RO or both. It’s seriously bad news.”

There remains some among delegates and the speakers that DECC may revise its proposed tariff cuts when the results of the FIT consultation are announced at the end of May.

The current position is that all stand alone PV installations and all other PV installations over 50kW are facing cuts of up to 70% in their tariffs from 1 August. The 50kW limit was criticised by Whitehead as stupid: “It’s too big for homes but too small for commercial installations,” he said.

Franz Ziering, of Bosch Solar Energy, went as far as to say that “whoever designed the 50kW target wanted to kill large solar PV, or slow its growth.”

His comments were echoed by other delegates, with one from a German company exploring opportunities in the UK, describing the current market as disastrous.

Even without knowing the final decision about the FIT tariffs, the way in which the government announced and handled the review 12 months ahead of schedule has left the sector shaken.

Delegates commiserated over the impact on investor confidence and those involved in solar thermal technologies are worried about unexpected changes to the Renewable Heat Initiative, due to start in July.

There was overall agreement that the sector desperately needed greater support and, most importantly, stability in government policy to be able to prosper.

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