UK renewable energy industry warns against cutting FITs

In total, 69 companies, including E.ON-UK, British Gas, Schott UK and Solar Century Holdings, have signed the letter urging the government to “maintain the necessary regulatory stability”.

They say that over the last two years, they have “invested substantially” in the UK’s microgeneration sector, which has resulted in the creation of “thousands” of green jobs.

“In particular,” states the letter, “the ‘feed-in tariff’ that guarantees small scale producers of renewable and low carbon electricity a long term fixed price for their power has given investors the confidence to grow an industry rapidly and in line with the Government’s expectations.

“Such premature adjustments to the tariff would have a profoundly damaging effect on long term investor confidence in the clean tech and renewable energy sectors, and may cause investors to flee altogether, thereby stifling any future investment and seriously jeopardising this country’s ability to meet its climate change and renewable energy targets.

“It would immediately destroy the value of recent investments in any company, technology or initiative built on the back of the feed-in tariff policy, and it would have damaging knock-on consequences for investment appetites against both current and future policies in the climate change/renewable energy sectors, and possibly in many unrelated sectors as well.”

Generous

The UK established its renewable energy FITs in April. Currently, photovoltaics (PV) receives what are considered to be very generous tariffs, with new installations under four kW earning 36.1 pence per kWh: installations between four and ten kW also receive this rate. Retrofit installations under four kW receive the best tariff, of 41.3 pence. Those between 11 and 100 kW can collect 31.4 pence, while installations between 101 kW and five megawatts (MW) receive 29.3 pence.

These tariffs should stay in place until April 2013. However, according to the letter: “There has been recent press speculation that the Government may be considering the quite unprecedented step of prematurely cutting the feed-in tariff payments prior to next year’s planned review of these tariffs, the outcome of which would be due to take effect in April 2013.”

Statistics

According to the UK’s Department of Energy and Climate Change (DECC), which released its 2010-second quarter energy statistics – the first publication of FIT statistics covering installed capacity for the first quarter of the FIT scheme (April 1 – June 30, 2010) – 98 percent of renewable energy in the country was generated by PV.

DECC adds that over 2,700 installations were PV, of which the majority were retrofitted sub-4 kW arrays on mainly domestic premises. “However,” explains the report, “due to the small size of the installations, they translate to only 44 percent of renewable energy capacity at 6.7 MW.”

Not the first time

Another open letter was sent to the UK Secretary of State, Chris Hune, back at the start of September, which said: “Current speculation over PV FITs as part of the Comprehensive Spending Review is rocking investor confidence just six months into the scheme.

"As a business man yourself, you understand just how important it is for businesses to be able to plan and invest with confidence. We urge you to please stand by the three-year take-off and ensure stability for the industry until 2013, when the first scheduled Tariff review will come into effect.”