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Feed-in tariff cuts hits hard for both consumers and industry
Posted by Cathy Debenham on 1 November 2011 at 9:36 am
Feed-in tariffs for solar PV will be cut in half as a result of changes proposed by Government in a consultation announced yesterday. The cuts will bring the solar boom to an end, and are widely expected to create a solar bust.
Currently installations of up to 4kW attract a generation rate of 43.3p per kWh from the feed-in tariff. This will be reduced to 21p per kWh for all installations with an eligibility date on or after 12 December. Return on investment which has reached double figures for well positioned solar PV will be cut to 4.5 per cent for this size of installation.
As a result, people who were about to install solar PV are left anxious about whether they will get in before the deadline, and if not, whether they can cancel contracts and reclaim deposits.
The solar industry, which has been one of the biggest growth sectors in the UK, now faces a six week race to beat the deadline, followed by anticipated redundancies, bankruptcies and contractual disputes. It is planning a day of action at Westminster on 23 November as part of its Cut don't Kill campaign, and may consider legal action.
As well as cutting the generation rates, the Government is consulting on a move to make the feed-in tariff part of a whole-building approach to energy efficiency. This would require building owners installing solar PV from 1 April 2012 to meet specified energy efficiency standards in order to be eligible for the full feed-in tariff rate. Those who did not meet the standard would get just 9p per kWh. The ways they might implement this are part of the consultation.
The proposals are also expected to put an end to free solar installations (often known as rent a roof schemes) through a new multi-installation rate for schemes where an individual or company owns or receives feed-in tariff payments from more than one solar PV installation. They will get just 16.8p per kWh for systems up to 4kW, a rate which the chief executive of HomeSun says makes the business no longer worth pursuing.
This consultation closes on 23 December 2011, some two weeks after the 12 December deadline for solar PV installations to be eligible to avoid the cuts. It focuses on the feed-in tariff for solar PV, and will be followed by a second consultation on the comprehensive review of the rest of the scheme, which is expected to be published towards the end of this year, with the aim of implementing any resulting changes in the first part of 2012. This will include proposals for introducing new cost control mechanisms which will hopefully negate the need for disruptive fast-track reviews in future, and allow both industry and consumers to plan ahead.
Click here to read how the proposals in the consultation are expected to impact on domestic installations.
Photo: muggy sunset by Paul Moody
If you have a question about anything in the above blog, please ask it in the comments section below.
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