Reformed UK FIT aims for transparency and longevity

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In a statement released today, it was said that the new proposals aim to create a scheme for the masses, rather than having FITs for the few. Barker boldly declared, "Our new plans will see almost two and a half times more installations than originally projected by 2015, which is good news for the sustainable growth of the industry."

The Government says a "huge strain" was placed on the FIT budget after photovoltaic installation costs plummeted by around 45 percent in 2011. According to the Guardian, which interviewed Climate Change Minister, Greg Barker yesterday, the cost for an average residential photovoltaic installation has fallen from £15,000 in 2010, to around £8,000 today. This is forecast to further drop to £6,000 this year, according to research from the consultancy Parsons Brinckerhoff, commissioned by the DECC.

Looking to Germany

In order to ensure there are no more surprises, the DECC is proposing to align FIT levels with cost reductions and industry growth. This will both ensure levels are in line with the market, says the department, and will build on the "best of the existing German system", thus removing the need for emergency reviews. The goal is, says the Guardian, to ensure a rate of return is kept steady at around five percent.

Furthermore, DECC says that £460 million will be allowed for new installations over the spending review period, and that budget flexibility will be used to account for the overspending from high photovoltaic uptake. "This won’t have any impact on consumer bills beyond the agreed overall cap on renewable subsidies as it will primarily be funded from an under spend on the budget allocated for large-scale renewables," explained DECC.

Under the latest proposals, a tariff of 21 pence per kilowatt hour (p/kWh) will also apply from April 1, 2012 for domestic-size photovoltaic panels with an eligibility date on or after March 3, 2012. Other tariff reductions will apply for larger installations. On January 19, in announcing its "Plan B", DECC said the new rates would range from 21 p/kWh for installations smaller than four kilowatts, down to 8.5 p/kWh for "stand alone" installations.

For those looking to install photovoltaic panels on a property after this April 1, will have to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for the full FIT. "The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical at this stage. We estimate that about half of all properties are already eligible for a ‘D’ rating," said DECC in a statement released.

The U.K. renewable Energy Agency (REA) says that while this is an improvement, it doesn’t make much sense. CE, Gaynor Hartnell commented, "The government has backtracked should not use energy efficiency requirements requiring an energy performance certificate of D rather than C. This will constrain the market less, but even so, it isn’t really a particularly logical thing to do. It makes perfect sense to do this for renewables for heating, but not when it comes to power generation."

New "multi-installation" tariff rates set at 80 percent of the standard tariffs will also apply from April 1, for an individual or organization that has more than 25 photovoltaic installations. DECC adds that it is looking into whether or not social housing, community projects and distributed energy schemes should be exempt from this rule.

While the proposals aim to secure certainty from April 1 onwards, DECC says that those who install photovoltaics between December 12, 2011, and March 3, 2012, cannot be given certainty on tariff levels, due to the ongoing legal proceedings between itself and the industry. The department, which has said it will seek permission to appeal to the Supreme Court. It has until February 21 to do so.