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Six things to put in your response to the feed-in tariff consultation
Posted by Cathy Debenham on 16 March 2012 at 12:39 pm
Government will take note this time, so make sure you respond to the current consultations on the future of the feed-in tariff, says Solar Trade Association PV specialist Ray Noble.
"Because they already had an overspent budget to defend, they didn't take notice of last October's consultation," said Noble, speaking at the Solar Power UK Roadshows this month. "However, they have found a further £1.1bn pot of money for the feed-in tariff and now they are listening."
Noble predicts that prices will not fall any more this year, and probably not next year. Despite this, and the proposed tariff levels, he is upbeat about the future for the solar industry. "1GW this year is worth having", he says. "It's still an industry.
These are Noble's recommendations on how to respond to the consultation:
1. Cutting the solar PV tariff from 25 to 20 years for new generators
This will bring solar PV into line with the other technologies. When the FiT was introduced PV was the most expensive technology, so it needed a longer payback. Now it is the cheapest, it makes sense to reduce the tariff period.
2. Deployment dates
The consultation sets out a range of possible tariffs from July 2012, and proposes that the tariff is set based on deployment levels of solar PV in March and April this year. Noble predicts another mini goldrush for solar PV at the 21p feed-in tariff rate during these months, and is strongly opposed to the choice of March and April as period to determine future tariffs.
3. Tariff rates
Even though PV prices are not expected to fall this year, the highest proposed rate (16.5p per kWh for systems up to 4kWp) can work for both industry and consumers according to Noble. Installers will need to look at ways of being more efficient; and energy prices are likely to continue to rise. Both these measures will help keep return on investment stable.
4. Export tariff
The 3p export tariff was originally set as a minimum with an expectation that energy companies might offer alternatives to win customers. In fact, all companies have stuck with the bottom rate. Noble recommends that it be increased to a minimum of 5p.
5. Index linking
The consultation asks whether the tariff should continue to be index-linked, and if so, should it continue at RPI (retail price index) or go to the lower CPI (consumer price index). Noble's take is that the index-linking is important to compete with ISAs, but CPI is a concession that wouldn't hurt too much.
The installed pricing may not drop at the rate that DECC has predicted, and if industry stalls because it doesn't Noble suggests respondents should ask DECC to cater for this by postponing planned degression.
With the government's option C (16.5p per kWh for up to 4kW) plus 5p export tariff Noble predicts the following will be viable:
- Domestic - what he calls the ISA market
- Solar fields in the south of England using ROCs
- New build - FiT rate is less relevant here as builders have to meet carbon ratings
- Social housing (the benefit of aggregation is not as great as the government thinks)
- Commercial buildings
- Carbon savers and brands who benefit from walking the talk.
- Free solar
Consultation 2A just covers Solar PV. It closes on 3 April 2012, and changes will be implemented from 1 July 2012.
Consultation 2B covers all aspects of the feed-in tariff. It closes on 26 April 2012, and changes will be implemented from 1 October 2012.
Photo by London Permaculture
If you have a question about anything in the above blog, please ask it in the comments section below.
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