Solar FiTs get a sustainable agenda

Published:  24 May, 2012

LONDON: DECC has just announced regulations that will put the Feed-in Tariffs (FiTs) scheme on a more predictable, certain and sustainable footing for householders, businesses and the solar industry. 

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/kWh, down from 21p, and will be set to decrease on a three-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.”

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 three months, reductions will be bigger (up to 28%) if there is rapid uptake.

* Tariff cuts will be skipped (for up to two quarters) if uptake is low.

* Uptake in three 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.

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