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The lowdown on Feed-In-Tariffs

The lowdown on Feed-In-Tariffs

At the end of October the Government announced that they have had to cut feed-in-tariffs.  FITS have been offered to businesses and homes which create their own electricity as part of the Clean Energy Scheme since February 2010.

Up to 41.3p per kilowatt hour has been available to domestic and smaller business installations which generate their own green electricity, with more financial reward if they produce extra for the grid and a reduction in their own bill as an overall result.  Business Green state the following ‘The government has confirmed it is planning to slash solar incentives by more than 50 per cent, cutting the feed-in tariffs available to domestic and small-scale business installations, from 43p per kWh to just 21p per kWh.’

When will the changes take effect?

The changes announced will affect any solar PV installation on generators registered after midnight on 11th December 2011, with the incentive rates being halved from then onwards.

The DECC (Department of Energy and Climate Change) state that they have reduced the tariff because ‘a rapid acceleration of PV deployment….combined with falling installed costs (by at least 30%)’ meaning that ‘returns available to new generators are higher than envisaged.’  They go on to say that this is not sustainable, and that’s why the new tariffs have been proposed.

The long and short of it is that FITS are not going away completely, but are not going to give as much money for energy as they used to!  This has negative implications for businesses and the solar industry as a whole and as a result there are many expressing their opinions on blogs and adding their name to petitions.

Response to the cuts:

Yesterday clickgreen.org.uk confirmed that ‘a group of leading solar PV firms are to launch a legal challenge in an attempt to block the UK Government’s plans to reduce the Feed-in Tariff for solar PV on December 12.  They argue that the sudden cut-off point is illegal and will cause damage to consumers and the industry.’

Click Green report a full response from the group of companies, which can be read here, detailing the fact that local authorities and social housing plans and projects will be directly impacted by the cut.  They offer readers the chance to express their opinion by emailing their ‘save our solar’ campaign.

Build.co.uk cover the key changes and outline the Local Government Authorities take on the changes, including the impact on council finances and community projects.

What does this mean for the solar pv industry?

The changes will mean that any projects planned to install solar panels are being rushed through to try and meet the new deadline, put on hold or not going ahead at all. If you want to learn more about which projects specifically are being effected, Publicfinance.co.uk discuss the cuts here.

There is also a useful summary of what the LGA is proposing the Government do to address the problem here, which highlights the fact that if Councils do not get ‘panels up and running and signed off by Ofgem (within 6 weeks). Those who fail to meet the deadline would have the subsidy they receive over the next 25 years halved. Subsidies for social housing would be cut by 60 per cent.’