Feed-in tariff reforms to handicap installation boom

Posted on 31 Oct 2011 by The Manufacturer

Climate Change Minister Greg Barker has announced reforms to feed-in tariffs for solar power installations after an installation surge put strains on government budget for the scheme.

The cost of an average domestic PV installation has fallen from around £13,000 to £9,000, since the start of the feed-in-tariff (FIT) scheme in April 2010.

As the number of installations has risen government has been forced to issue proposals for reduced subsides for domestic solar electricity production in an attempt to keep the FITs budget under control.

The proposals will introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure those schemes receive a consistent rate of return.

Climate change and energy minister, Greg Barker explained the government response saying, “The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and do not threaten the whole viability of the FITs scheme.

Mr Barker acknowledged that the reforms made the installation or solar power generation capabilities unlikely on a commercial scale commenting, “Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

The recent surge in the number of households installing solar PV has threatened to break the budget, in September alone 16,000 were installed – nearly double the number installed in June.

The new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after December 12. Such installations would receive the current tariff before moving to the lower tariffs on April 1. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before December 12 will receive the current rates for 25 years.

“People who are now thinking of installing solar PV need to do so with their eyes wide open and I’d encourage them to call the Energy Saving Trust for the latest advice,” concluded Mr Barker.