UK outlines plans to lower FITs; industry outraged18. March 2011 | Top News, Markets & Trends, Industry & Suppliers, Applications & Installations | By: Becky Stuart
The UK Government has announced its plans to cut PV feed-in tariffs (FITs). Under the proposals, support for all new and standalone installations over 50 kilowatts (kW) will be reduced. The Renewable Energy Association (REA) has reacted with outrage.
The news follows the launch of a fast-track review in February into how the PV FITs work for systems over 50 kW. According to the government, it was necessary after evidence indicated there could already be 169 megawatts (MW) of large scale solar capacity in the pipeline.
Under its proposals, the new rates would be:
- 19 pence per kW hour for systems between 50 kW and 150 kW in size;
- 15 pence per kW hour for systems between 150 kW and 250 kW; and
- 8.5 pence per kW hour for systems between 250 kW and 5 MW, and stand-alone installations.
The REA states that the proposed changes would see the FITs for roof-mounted systems over 50kW reduced by between 39 and 49 percent, thus making them "totally unviable". Meanwhile, the tariff for standalone schemes would be reduced by over 70 percent.
If the cuts are not implemented, systems between 10 kW and 100 kW would receive, from April 1, a tariff of 32.9 pence per kW hour, while those ranging from 100 kW to 5 MW, and stand alone installations would receive 30.7 pence per kW hour.
In a statement issued by the Department of Energy and Climate Change, it was said that the costs of solar have been reduced, and are now believed to be around 30 percent lower than originally projected. "This means the technology does not need as much support to be competitive," it explained.
Furthermore, it says that it is looking to protect financial support for homes, communities and small businesses, and that that larger installations - over 50 kW in size - could soak up the subsidy that would otherwise go to smaller renewable schemes or other technologies such as wind. REA PV specialist Ray Noble believes however that the industry has "been strangled at birth."
Gaynor Hartnell, chief executive of the REA added: "Larger PV projects are cheaper, and have a major role in driving down costs. We don’t want boom and bust in this sector either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The UK will return to the solar slow-lane. It’s as good as a retrospective change and that does untold damage to investor confidence. It’s not acceptable and we will fight it."
Greg Barker, Climate Change Minister went on to say: "I want to make sure that we capture the benefits of fast falling costs in solar technology to allow even more homes to benefit from feed in tariffs, rather than see that money go in bumper profits to a small number of big investors.
"These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FITs scheme was never designed to be a profit generator for big business and financiers.
"Britain’s solar industry is a vital part of our renewables future and our growing green economy. The new tariff rates we’re putting forward today for consultation will provide a level of support for all solar PV and ensure a sustained growth path for industry."
He concluded: "Taking a pro-active approach to changing tariffs will allow us to avoid the boom-and-bust approach we have seen in other countries and enable us to support more homes and community schemes, and a wider range of technologies such as wind, hydro and anaerobic digestion."
REA and the Solar Trade Association state that they represent over 350 solar companies many of whom are already in difficulty following a "destabilizing and messy review process".
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