On the 31st October the Department for Energy and Climate Change released details of a consultation aimed at drastically reducing the Feed-in-Tariffs available for electricity generated by solar PV installations. These cuts have been made in response to dramatic reductions in the global costs of installing solar PV, estimated at 30% since the FITs scheme started 18 months ago, and a substantial increase in the number of registered and proposed solar PV installations. This, along with rising electricity prices, has meant that higher FIT payments than predicted would be payable to new PV installations, resulting in a risk that PV generators would be over-compensated. The proposed cuts are also aimed at preventing the overall spending envelope for the FITs scheme being exceeded, which would limit the availability of FITs for other technologies.

The proposed reductions focus on solar PV installations with a total installed capacity of up to 50kW, but further reductions are proposed in relation to installations with installed capacity between 50kW and 250kW, which were previously reduced in August of this year.

It is proposed that these changes will apply from 1st April 2012 to all new solar PV installations with an eligibility date on or after 12th December 2011. The proposed changes will apply in England, Scotland and Wales.

There are also proposals to introduce energy efficiency levels to be achieved before solar PV FITs can be obtained, and for new multi-installation tariff rates for aggregated solar PV schemes where a single person owns or receives FIT payments for more than one PV installation located on different sites.

The Department for Energy and Climate consultation is available here. The closing date for responses is 23rd December 2011.

A second consultation is due to be released at the end of 2011 on other aspects of the scheme, including tariffs for other FIT technologies and proposals for introducing cost control mechanisms for FITs to ensure the ongoing affordability of the scheme.