Photovoltaic news and pv jobs

UK FIT cuts to take effect from August

For a second time this year, the U.K. government has revealed a new photovoltaic feed-in tariff (FIT) scheme, aimed at establishing a more "predictable, certain and sustainable" industry. Under the changes, a new 16 pence (p) FIT will be introduced from August 1. According to STA, there are now provisions to install 800 MW to one GW annually.

The UK solar industry has previously opposed the proposed FIT cuts.

Flickr/Friends of the Earth

Under the changes, scheduled to come into effect on August 1, small domestic solar installations (between 0 and 10 kW) will receive 16p per kilowatt hour, down from 21p.

Furthermore, all tariffs will decrease on a three month basis, starting on October 1. A reduction of 3.5 percent will be made, unless "rapid uptake occurs". In this instance, reductions of up to 28 percent could be made. On the other hand, should uptake be low, tariff cuts will be "skipped" for up to two quarters. The monthly degression will depend on which band the installation falls into:  domestic (0 to 10 kW); small commercial (10 to 50 kW); or large commercial (above 50 kW and standalone installations).

"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," said DECC in a statement released. It added that the new tariffs are expected to reap a return on investment of between six and eight percent.

Barker commented, "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."

In addition to the lower tariffs, other changes include:

• The multi-installation tariff – for organizations with over 25 installations – will receive 90 percent of the standard applicable tariff, up from 80 percent;
• The export tariff will be increased from 3.2p to 4.5p/kWh for those installations with an eligibility date on or after August 1;
• The FIT lifetime will be reduced from 25 to 20 years for those installations with an eligibility date on or after August 1; and
• Tariffs for installations that do not meet the energy efficiency requirements will mirror the tariffs for standalone installations.

New FIT rates at a glance

Source DECC

Gigawatt market

While STA says it "welcomes many aspects" of the new framework, it "remains concerned about the state of the UK solar market in the recession." Barwell added, "This now provides the industry with the security of guaranteed tariffs to 2015 allowing it to build for the future. The STA is pleased to have won its ask for quarterly reviews with more responsiveness to market size, and less emphasis on automatic tariff cuts."

STA added that the resources are now available to install between 800 megawatts (MW) and one gigawatt (GW) of photovoltaics annually until 2015. But, "these figures do not include large-scale projects that are able to use the Renewables Obligation (with 2 ROCs available for large-scale PV), of which there could be a further 300-600MW installed before April 2013," it continued.

Furthermore, it is concerned that there is no allowance for around 300 MW of installations at the current 21p tariff rates before the new tariff reduction, which would have reportedly allowed for "full market recovery". It is also critical of the fact there is no "reverse gear" on tariffs if the market continues to stall. Finally, the association says it "disagrees with DECC’s methodology for the calculation of long-term returns on investment."

Bright future

DECC, however, believes there is a "bright future" for the U.K. solar industry, although, it says that if the country is to meet its 22 GW goals by 2022, photovoltaics will need to become viable with either reduced, or no subsidies, and through continued cost reductions.

To achieve its goals, the DECC has launched a solar PV cost reduction taskforce, in partnership with industry. "DECC is also pleased to welcome plans being brought forward by Cornwall Council and the Building Research Establishment to set up a National Solar Centre in Cornwall," continued the statement.

Background

At the start of February, the U.K. government proposed a new FIT proposal, which aimed to create a scheme for the masses, rather than having FITs for the few. However, industry reacted badly, and branded the cuts "destructive".

Following an uncomfortable period, where the industry and government battled previous FIT changes out in court, on May 16, the U.K. Solar Trade Association (STA) wrote to Energy Minister, Greg Barker asking him to delay the proposed photovoltaic FIT cuts, which were planned for July 1. The solar market, said STA, has stalled since April 1, when the last set of changes came into play, specifically the new energy efficiency criteria, and installed capacity in April dropped from a four-weekly average of 71 MW to just 17 MW.

A day later, on May 17, Secretary of State, Ed Davey, announced that the country’s Department of Energy and Climate Change (DECC) had delayed the cuts after "listening carefully to industry". The delay was designed to allow the industry time to adjust.

At the time, STA chairman, Alan Aldridge stated, "The STA has been seeking to counter the public confusion around solar in a bid to reignite the market (the Feed-in Tariff offers a ROI today which is as good as when it was first launched), but this effort will take some time to translate into sales. There is no doubt that solar is in better shape now than last autumn, but we need the Government to allow the market to adjust to changing circumstances before introducing the next round of tariff cuts."