Solar companies already reeling over Brexit and the potentially grim industry outlook now face even more uncertainty over FIT payments. The U.K.’s gas and electricity regulatory authority, Ofgem, said in its latest weekly update on the subsidy scheme that 16 MW of projects in the 50 kW capacity band have breached the deployment cap. It said it has received 57 MW of applications against a deployment cap of 41 MW.
The FIT scheme is set to end on April 1, meaning that companies whose installations have exceeded the capacity band will have to wait for the introduction of the next subsidy program, the Smart Export Guarantee. The Renewable Energy Association has described the situation as “a cruel April Fool’s joke for the microgeneration industry which is left with no route to market.”
The Department for Business, Energy and Industrial Strategy (BEIS) has proposed a Smart Export Guarantee to replace the export tariff from April 1. However, no decisions have been made yet, leaving plant owners in limbo. As it stands now, the proposal envisions tariffs that would be determined on a half-hourly basis, reflecting near real-time demand and supply conditions. However, BEIS has said that for the interim period, five different tariff options are on the table, from a non-variable flat rate tariff to benchmark and market-linked tariffs.
“The closure of the Feed-in-Tariff and prolonged time gap between the introduction of the proposed Smart Export Guarantee is highly damaging to the solar PV industry,” said Frank Gordon, head of policy at REA. “Hundreds of British SMEs installing solar are already facing huge challenges and leaving the sector with no route to market risks significant job losses and lost investment at a time when we need more generation capacity.”
To protect companies that have invested in at-risk projects, the REA has suggested that spare capacity from lower bands could be reallocated to the band above 50 kW. According to Ofgem, the application rate for the 10-50 kW and below-10 kW bands have received applications well below their caps. Around 450 MW of spare capacity could be reallocated.
Gordon said the REA has been campaigning to reallocate funding for a long time. A failure to make adjustments could spell disaster for companies that expect FITs. Reallocation would also mean that the maximum potential of the available funds could be tapped.
“Not acting now could result in yet another pipeline of projects being ‘ghosted’ – where developers thought progress was being made then, despite their time and efforts, they suddenly disappear,” Gordon said.