UK early FIT review confirmed


The country’s Department of Energy and Climate Change (DECC) Secretary, Chris Huhne has today launched a comprehensive review of the UK FIT scheme, which was only introduced last April. The reason cited is the growing evidence that large scale solar farms could take money away from households, communities and small businesses looking to generate their own electricity.

Speaking to pv magazine last week, PV expert for the UK’s Renewable Energy Association (REA), Ray Noble, said the government was considering bringing its FIT review forward by one year, because the PV market is developing differently from its original expectations, and due to the fact the price of solar has changed dramatically over the last few years, while installed PV prices have significantly come down. "The government started this policy [the feed-in tariff (FIT)]," said Noble, and they "thought it would just ramp up slowly over a ten year period. But it has really taken off."

The review will reportedly:

  • Assess all aspects of the scheme including tariff levels, administration and eligibility of technologies;
  • Be completed by the end of the year, with tariffs remaining unchanged until April 2012 (unless the review reveals a need for greater urgency); and
  • Fast track consideration of large scale solar projects (over 50 kW) with a view to making any resulting changes to tariffs as soon as practical, subject to consultation and Parliamentary scrutiny as required by the Energy Act 2008.

Massive uncertainty

Following the official announcement by the DECC, the REA has hit back by saying the move "creates massive uncertainty for all PV projects over 50 kilowatts (kW)". Chief executive, Gaynor Hartnell commented: "Developers of PV installations upwards of 50 kW, will be left hanging in the air. Bands up to four kW can be more confident tariff levels will remain unchanged until April next year, but developers of schemes from 10 kW to 50 kW in particular will be wondering how the announcement applies to them. DECC expresses concern about field arrays, but it is fast-tracking far more than the stand-alone field arrays. In our view this has escalated the uncertainty."

Overall, the REA says it welcomes the fact that the review is the first step in a process, which should ultimately end uncertainty, and that DECC acknowledges the PV FIT scheme is creating huge growth in jobs.

However, it has expressed concerns that the comprehensive nature of the review creates widespread uncertainty, while there is also potential for stranded investment. Furthermore, it believes there has been a failure to appreciate the importance of non-domestic and community-scale schemes in the UK PV sector, despite the Microgeneration Consultation and Coalition Document’s emphasis on community-scaled schemes. It adds that there are "very low levels of ambition" for PV, thus placing the UK far behind other major EU countries, and there is no clear strategy outlining how the UK PV sector will reach grid parity.

Hartnell continued: "REA recently put out research showing the PV industry will create 17,000 new jobs during this year and since the start of the scheme. This announcement will inevitably undermine prospect for employment growth. DECC must develop a bigger vision for what this technology can deliver, as the UK is falling far behind other major EU countries on its ambition levels. REA wants to see any review closely examine the huge benefits of a thriving PV industry because when those benefits are fully appreciated it’s obvious the UK should aim to do a lot more with this technology which is booming internationally."

Solar farm risk

Last year’s Spending Review committed the UK Government to saving 10 percent of the costs of FITs in 2014 to 2015 through a review due to start next year. However, it was reported that this could start earlier if uptake exceeded the government expectations. In a statement, it was said that because of the risk of an increasing number of large scale solar farms, which could push FITs costs off track, and the need to give industry added certainty to invest, the coalition has announced a comprehensive review into the scheme.

Chris Huhne commented: "The renewables industry is a vital piece in the green growth jigsaw and this review will provide long term certainty while making sure homes, communities and small firms are encouraged to produce their own green electricity. Large scale solar installations weren’t anticipated under the FITs scheme we inherited and I’m concerned this could mean that money meant for people who want to produce their own green electricity has the potential to be directed towards large scale commercial solar projects."

The Government has said it will not act retrospectively and any changes to generation tariffs implemented as a result of the review will only affect new entrants into the FITs scheme.