Summary and implications
The Government confirmed on 9 June the reduction in feed-in tariffs available for generation of electricity by larger scale solar PV. The new tariffs will take effect from 1 August 2011.
The announcement follows a recent public consultation which closed on 6 May. The review and subsequent new tariff rates have aimed to reduce tariffs for larger scale solar, in order to “protect money available for small scale projects”. The fast track review revealed that the number of planned larger PV projects is much higher than originally expected. The new tariffs are also intended to further encourage the uptake of green electricity from anaerobic digestion.
From 1 August 2011 new entrants into the FIT scheme will receive the following tariffs:
- >50 kW – ≤ 150 kW Total Installed Capacity – 19.0p/ kWh;
- >150 kW – ≤ 250 kW Total Installed Capacity – 15.0p/ kWh;
- 250 kW – 5MW Total Installed Capacity and stand-alone installations – 8.5p/ kWh.
- ≤ 250 kW – 14.0p/ kWh;
- >250 kW – ≤ 500 kW – 13.0p/ kWh.
The rates are as predicted in the consultation undertaken by the Department for Energy and Climate Change in March. Although the scheme was not originally capped, and therefore there is no effective limit on the money available for small scale projects, the Government has justified the review by way of the concept of a “saving” in respect of an estimated reduction in public subsidy of £400m to £360m.
Such a dramatic reduction in tariffs is likely to prevent any further solar projects above 50 kW being developed across the UK.
This announcement came on the same day that the High Court granted a group of organisations and individuals involved in the development of solar PV projects permission to proceed with a Judicial Review on all grounds against the Secretary of State for Energy and Climate Change, Chris Huhne. On 18 April 2011 the group filed a claim in the High Court against the Secretary of State over the review of the feed-in tariff scheme, including the fast track review of the feed-in tariff for larger scale solar developments, which was launched on 7 February 2011.
The grounds for judicial review
The application to the Court for judicial review of the Secretary of State’s decision to undertake the review of the FIT scheme included the following arguments:
- Previous statements by DECC included clear representations that a first review of the FITs scheme would take place in 2012 with any resultant changes being implemented in April 2013;
- No announcement on the trigger for an early review was ever made by DECC;
- The fast-track review is predicated on a concern about excessive deployment of so-called “large scale” solar projects. The organisations and individuals involved in the judicial review challenge are not aware of any current evidence of “excessive deployment” of this technology. The review is therefore based on a perceived risk of excessive deployment, and belated recognition that the original projections for likely numbers of developments may have been flawed;
- Targeting ground mounted, grid connected solar PV projects (at the larger end of the tariff bands), which are the most cost effective and efficient of the range of possible applications of the technology, is irrational in the context of the Government promoting investment in renewable energy whilst balancing the cost to the consumer.
We will keep you updated with the progress of the review; however it is unlikely that even a successful judicial review would restore investor confidence, or prevent the cut occurring at the next official review in any event.