Summary and implications

On 31 October, the Department of Energy and Climate Change announced it was consulting on yet further cuts to the Feed-in Tariff scheme for solar PV.

The consultation entitled “Comprehensive Review Phase 1: Consultation on Feed-in Tariffs for solar PV”, outlines the Government’s proposals to:

  • reduce the generation Feed-in Tariff (FIT) available for solar PV, for installations commissioned after 12 December 2011;
  • further reduce the generation FIT available for “multi-installations”; and
  • link generation FITs to the energy efficiency of a building, limiting FITs to 9p/kWh if minimum levels are not achieved.

To access the consultation click here

The deadline for consultation responses is 23 December 2011.

Cuts for installations commissioned after 12 December 2011

The proposed timescale for introducing the cuts is from 1 April 2012. However, it is proposed to apply, in effect, retrospectively for any installation commissioned after 12 December 2011 (the reference date). This means that any installation commissioned after the reference date will:

  1. receive the current generation tariff rates only until 1 April 2012; and
  2. will receive the cut rate detailed in the table below, for the remainder of the 25 year tariff period.

Click here to view table

New multi-installation tariff rates

The proposals also include a new multi-installation tariff rate for aggregated solar PV schemes (i.e. where a single individual or organisation owns or receives FIT payments from more than one PV installation, located on different sites). The proposed tariff rates for multi-installations are 80 per cent of the proposed revised rates above and are set out in the table here.

FITs linked to minimum energy efficiency levels

Finally, there are also proposals to link FITS for solar PV to the energy efficiency of buildings, by introducing a new energy efficiency requirement. The FIT generator will be required to demonstrate that the building on which the solar PV is located meets certain energy efficiency criteria, in order to receive the proposed new FIT generation tariffs. If they cannot, the FIT generator will only receive a generation tariff of 9p/kWh. Current proposals include requiring the buildings to meet an Energy Performance Certificate (EPC) rating of level C or above, or alternatively, requiring the undertaking of the measures that are identified on an EPC as potentially eligible for Green Deal finance. A transitional arrangement would be put in place, giving 12 months from 1 April 2012 for the relevant energy efficiency measures to be undertaken.

Industry response to the proposed cuts

As would be expected, the industry response to the proposed cuts has been negative. Howard Johns, managing director of Southern Solar, has said that “such deep cuts would kill the UK solar industry stone dead… wiping out 4,000 companies and 25,000 jobs by cutting too deeply would be an appalling waste of economic potential.”.

Chief executive of the Renewable Energy Association, Gaynor Hartnell, has also stated in response to the proposals that “these changes undermine confidence across all energy-related investments, even CCS and nuclear, as we need to be confident that the Government will honour their commitments and not chop and change”.

In response to the proposals, the solar industry has established the “Cut Don’t Kill” campaign. This will include the first ever solar PV national lobby day of Parliament on 23 November 2011.