DECC has today announced the consultation on the 'Comprehensive Review Phase 1 of the FIT Scheme' which focuses on Solar PV. The consultation is the first of two comprehensive reviews of the FIT Scheme and DECC will be publishing Phase 2 towards the end of the year, which will focus on other aspects of the FIT scheme including other renewable technologies.

Reduction of generation tariffs for solar PV installations

The Government proposes to reduce the generation tariff for solar PV schemes up to 250kW capacity for those installations with an Eligibility Date on or after 12 December 2011. The proposals mean that those installations with an Eligibility Date on or after 12 December 2011 will receive the current generation tariff until 31 March 2012 and then the reduced tariff from 1 April 2012 for the remainder of their Eligibility Period.

DECC have also proposed a new 'multi-installation tariff' for aggregated solar PV schemes, i.e. where a single individual or organisation owns or receives FITs payments from more than one PV installation, located on different sites. The new tariff rates would apply to all new PV installations that are part of an aggregated PV scheme and have an Eligibility Date on or after 1 April 2012. The new tariffs are set at 80% of the standard tariffs for individual installations.

The full consultation document can be found by clicking here and the table of current and proposed solar PV tariffs can be found by clicking here. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before 12 December will receive the current rates for 25 years.

The consultation is based around the concern of the high level of deployment of solar pv and the wider cost implications. In today's statement, the DECC said if the Government took no action, by 2014-15 FITs for solar PV would be costing consumers £980 million a year, adding around £26 to annual domestic electricity bills in 2020. DECC says its proposals will restrict FITs PV costs to between £250-280 million in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 in 2020.

The Government says it will also, as part of its review into the FITs Scheme, consider whether more could be done to enable genuine community projects to be able to fully benefit from the FIT Scheme and whether, for example, a definition of community scheme is required and if so, how this should be defined.

Energy efficiency requirements

Today's consultation also proposes  a new energy efficiency requirement that would mean from 1 April 2012 a property would have to reach a certain level of energy efficiency to receive the proposed new tariff rates. This could include reaching an Energy Performance Certificate level of C or taking up all the measures potentially eligible for Green Deal finance. As a transitional arrangement, it is proposed that installations with Eligibility Dates between 1 April 2012 and 31 March 2013 would have 12 months from the Eligibility Date to comply with the energy efficiency requirement.

Responses to the proposals in the consultation are invited by Friday 23 December 2011.

Whilst it was anticipated that the comprehensive review would seek to change the generation tariff for solar pv installations from 1 April 2012, the fact that the consultation proposes changes to installations accredited from 12 December 2012 will have a damaging effect on an already fragile solar industry. This consultation comes less than 3 months after the changes brought about by the fast-track review which were brought into force on 1 August 2011 and it raises questions as to why these changes were not sought at that stage. There are now only 6 weeks until the proposed changes would start to have an effect, the Consultation out lasting the length of this period, and as a result FIT Generators with projects that can be finalised in this period will be rushing to construction. Those that cannot will simply lose funds already invested or committed. DECC does not seem to have aligned its time line with the delivery time lines of panel suppliers which are often on at least an 8 week delivery period thereby making it impossible for many to realise funds invested.