The Feed-in Tariff (FITs) scheme was launched in April last year to provide financial incentives for generators of low carbon electricity. Since then, there have been over 25,000 FITs installations registered.
The FITs scheme was developed to encourage individuals, householders, organisations, businesses and communities who had not typically experimented in the electricity market to undertake production of low carbon electricity on a relatively small scale.
One of the technologies supported by FITs is Solar Photovoltaic (Solar PV). Solar PV is a proven technology which is considered apt for installing within small business, domestic and community set ups. The tariffs for Solar PV were carefully set to provide a reasonable return for the audience it was designed for, but not to be high enough so as to attract large-scale financial investors.
Since the idea for the FITs scheme began, many factors have changed leading to results that were not initially predicted. Factors include, for example, lowered Solar PV technology costs due to global investment.
The Department of Energy and Climate Change (DECC) are concerned that the risk of swift expansion of larger scale Solar PV will leech funding away from other areas under the FITs scheme. Reportedly, there are 31 planning applications for Solar PV farms in the UK between 250kW and 5MW. As a consequence, the DECC have issued a Consultation Paper on Fast-track review of Feed-in Tariffs for small scale low carbon electricity. They propose to introduce three new tariff bands which will, in effect, reduce the level of support to all new PV installations above 50kW and stand-alone installations.
The DECC stress that the proposals will only affect new entrants to the FITs scheme. If Parliament backs the proposals, the revised tariffs will take effect from 1 August 2011.