New solar Feed-in Tariff consultation news

On the 24th May Climate Change Minister Greg Barker confirmed the next wave of cuts to solar feed-in tariff incentives will come into effect from August 1, one month later than originally planned, cutting payments for small scale installations from 21p/kWh to 16p/kWh with a possible decrease on a quarterly basis thereafter depending on installation rates.

Following detailed consultation with industry and consumers, the Government is introducing a range of changes to the FITs scheme with effect from 1 August to provide better value for money and allow businesses and householders to plan with confidence.   This is good news for the industry and for consumers and will ensure that as many people as possible benefit.

The tariff for a small domestic solar installation will be 16p per kilowatt hour, down from 21p, and will be set to decrease on a 3 month basis thereafter, with pauses if the market slows down.  All tariffs will continue to be index-linked in line with the Retail Price Index (RPI) and the export tariff will be increased from 3.2p to 4.5p.

The new tariffs should give a return on investment (ROIs) of over 6% for most typical, well-sited installations, and up to 8% for the larger bands.

The industry has been very successful in bringing solar technology costs down swiftly over the last two years and the improved scheme will reflect this trend as well as recognise the increasingly significant place solar PV can now have in local renewable electricity generation.

Energy and Climate Change Minister Greg Barker said: “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.

“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.”

Changes to solar Feed-in Tariffs

Tariffs for solar pv installations to be reduced from 1 August:

  • 16p/kWh for household scale solar pv installations to reflect fall in cost of the technology, delivering a return of about 6% for a typical installation.
  • Tariffs for larger installations also to be reduced to reflect cost reductions but with most tariff cuts lower than proposed in February.
  • Reductions to apply to new installations from 1 August, instead of 1 July as proposed, in recognition of low uptake from 1 April and providing time for industry to adapt.

Multi installation tariff increased to 90% of standard tariff

Organisations with more than 25 solar pv installations will get 90% of the standard applicable tariff, increased from 80%, reflecting new evidence on costs involved for these projects.

Reduction in tariffs over time in line with uptake of FITs scheme

  • Ensuring solar PV is not over subsidised.
  • Average tariff reductions of 3.5% every 3 months, reductions will be bigger (up to 28%) if there is rapid uptake.
  • Tariff cuts will be skipped (for up to 2 quarters) if uptake is low.
  • Uptake in 3 different bands (domestic (size 0-10kW), small commercial (10-50kW) and large commercial (above 50kW and standalone installations) will determine the quarterly reductions within those bands.

Increase export tariff from 3.2p to 4.5p/kWh

  • To better reflect the real value of electricity exported to the grid.

RPI index-linking of generation tariffs to be retained

  • Reflecting the high value investors place on this element of the FITs scheme.

Scheme lifetime reduced from 25 to 20 years for new solar installations

  • Reducing the lifetime costs of the scheme and bring solar in line with most other technologies supported under FITs.

Tariffs for installations which do not meet the energy efficiency requirements will mirror the tariffs for standalone installations

  • Ensuring energy efficiency is still encouraged as tariffs are reduced.

 Call us for an up to date price to supply and install on 01926 886611

1 Comment to New solar Feed-in Tariff consultation news

  1. June 17, 2012 at 11:22 | Permalink

    1. The propsed cut in Feed In Tariff from 43.3p to 21p/kW from April Ist is draicnoan & greater than 50% since the 43.3p figure will rise with CPI from April. A 30% reduction would be acceptable >50% is not.2. Registration for new systems must be completed by December 12th & this means that virtually all installations started after November 1st will fail to meet this target since registration can take 6-8 weeks partly due to Government Dept involvement. My recently completed home installation took 40 days to be registered. Far fairer would be a registration completion date of March 12th 2012. The existing proposal could kill off 80% of solar instalation firms immediately.3. To have a registration completion date two weeks before the end of the consultation document appraisal period cannot be legal.4. Currently for home systems of less than 4kW output the energy companies pay an exit tariff of 3.1p/kW, whereas my company charges me 11.1p/kW I use. Surely there is a case for raising the exit tariff rate to 6 or 7p/kW & payable on 75% of our production rather than the current 50% which doesn’t reflect the reality of the situation.5. The majority of the population are lukewarm over green energy saving proposals, but for home solar panel installations there has been tremendous enthusiasm. The current tariff reduction proposals will kill this off.6. Finally why the moral objection to the existing generous tariffs for home solar panel installations when landowners who install wind turbines are paid subsidies at an obscene level. Joe Bloggs is not to be allowed to profit, but Lord Joe Bloggs is. This is discimination.David Shepherd

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