Future of feed-in tariff still uncertain
Posted by Howard Johns on 26 November 2010 at 10:38 am
The uncertainty surounding the future of feed-in tariffs continues after yesterday’s meeting between energy minister Greg Barker and representatives of the PV industry and other stakeholders. Its purpose was to discuss the implications of the comprehensive spending review on the scheme. He confirmed DECC’s continued support for feed-in tariffs, and then focused on two main aspects of it, as follows:
He made a clear statement that the feed-in tariff scheme has a finite and predetermined budget. I don’t currently know what this budget is – but I will try to get clarity on it shortly. Figures around expected deployment have now become guideline budgetary amounts that the scheme must live within. This represents a substantial change in how the policy was constructed and intended and means that we may be forced into an early review if the scheme is “too successful”.
The meeting set a number of un-answerable questions about what will trigger an early review of the system, and gave groups of perplexed industry figures fifteen minutes to come up with some answers to them: questions like, should an installed capacity figure be the trigger of a review process or some other metric?
The other key area around funding was that the scheme was to be reduced by 10% in 2014/15 (from £400m to £360m). The point made by civil servant Stephen De Souza was that this reduction in funding may have a severe effect on the reduction of tariff rates if deployment numbers were higher than expected.
The second point, which was very forcefully put, was that solar farms on green field sites were not part of the original tariff design, and they are not part of the current plan. About solar farms Greg Barker said: “I need to be clear. If there is an undue increase in their numbers, and it looks like they are going to take a disproportionate amount of the funding then I will intervene. I hope this won’t be necessary.”
We are faced with the third period of uncertainty in the short life of the feed-in tariff, the question now seems, will it survive to its first birthday without entering a review process? My feeling is that we must push to keep the review where it was originally set, and not give in to the fear factor being created by the new limit to our activities.
There was discussion that an industry panel wil be put together to work with DECC on what happens next. Any review has to follow process, which will include consultation, evidence-gathering, parliamentary ascent, and could take a year to complete.
For most installations going in at this time – domestic ones – this is unlikely to alter things dramatically, but for any projects which take significant amounts of time to deliver, there is a question over whether they will be achievable. With this level of uncertainty, investors may well look for other places to deploy their funds.
On a brighter note, he said there would be “no retrospective changes in tariffs”. The fun continues…
Photo by Lance Cheung
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