Government To Review Feed-in Tariff Scheme
The Department of Energy and Climate Change (DECC) is proposing to cut the feed-in tariff rates for solar PV installations.
The Government has published its review of the Feed-in Tariff scheme for supporting small-scale renewables on homes, offices and public buildings. The scheme is dominated by solar PV installations, which is the UK's most popular energy source according to DECC polling.
Stakeholders can now feed back to the government, with the deadline for responses 23rd October 2015.
In recent weeks, ministers have tightened planning restrictions and reduced subsidies for wind farms. They also closed the £540million Green Deal, which gave out loans for domestic energy efficiency improvements.
Ministers claim they are taking "˜urgent action' to tackle overspend within the Department of Energy and Climate Change and to protect "˜hard-working bill payers'.
Its latest consultation says government spending on feed-in tariffs "“ schemes that pay producers a subsidy for the electricity they generate "“ should be limited to between £75 million and £100 million by 2018/19.
This review has been anticipated for some time but it is the third consultation in a summer of policy announcements designed to curb subsidy spending on renewable energy in the UK
DECC is also proposing to change the indexation of the feed-in tariff scheme, moving it away from retail price index (RPI) to consumer price index (CPI). The department argues that CPI is a more appropriate way of compensating investors for inflation.
DECC hopes the measures will help to curb spending on renewable energy through its clean energy support mechanism, known as the Levy Control Framework (LCF).
Mike Landy, Head of Policy at the Solar Trade Association commented:
"The proposals put forward by the Government today, which will now undergo a period of consultation, would be hugely damaging for the UK solar industry and we are now consulting quickly with our member companies as to how to respond."
"We will provide a detailed response shortly, once we have considered the proposals in more detail. However, we regret that proposals to suddenly cut Tariffs combined with the threat of closure of the scheme next January will spark a massive market rush. This is the antithesis of a sensible policy for achieving better public value for money while safeguarding the British solar industry.
Frans van den Heuvel, CEO at Solarcentury:
"Today's proposed solar FIT cuts announced by DECC add to the calculated turmoil that the new Government has unleashed on the solar market since the election. In little more than three months, the Conservative Government has literally turned upside down the certainties which had characterised the UK renewables market and the cross-party consensus that underpinned it. If the consultation is enacted, we can expect to see a wholesale collapse in solar take up by homeowners and businesses "“ just at a point in time when most other countries are escalating their solar deployment having seen the dramatic impact the technology can make in tackling climate change. So much for Amber Rudd's promised "solar revolution" and the former Conservative energy Minister's pledge to put "rocket-boosters" under the non-domestic roof sector.
The rushed announcement of retroactive changes to solar support schemes, including the Renewables Obligation, since the election have been shocking and damaging, all the more so, since the Conservative Party's Election Manifesto was silent on these issues. Today's threat to close the feed-in tariff scheme altogether from 1st January 2016 trumps even all of those. At least our colleagues in the onshore wind industry knew what was coming from the clear Manifesto commitment to end support for onshore wind. But the truth is that remarkably, solar, by far the country's most popular renewable technology, is being treated even worse than onshore wind."
Juliet Davenport, chief executive of Good Energy, said:
"The proposed cuts mean that installing solar panels at home will no longer be attractive to British families."
"The Feed in Tariff has transformed the way the UK generates its power over the last 3 years, with over 22% of the UK's power coming from renewables in the early part of 2015, and over 700,000 homes generating their own power. It's helped to take us away from the old-fashioned fossil fuel companies to a cleaner, local, more democratic system."
"We hope the government will re-think the value that renewables bring to the market, if you do the calculations you'll see that solar actually brings down wholesale prices of energy. China and Germany are leading the way in investing in renewables, and we hope that the recent announcements by government don't see the UK fall behind again."
"It's also going to put the brakes on innovation in the battery storage market, a game-changing technology which would enable households to store their own electricity."
Reza Shaybani, BPVA Chairman commented:
"Today's announcements are totally unacceptable and unnecessary. These are bad news for the UK solar industry but also very bad news for the country as a whole, as it eliminates an option for individual homeowners and businesses to save money and produce their own green energy and also makes the UK an unsafe place for investment. Cutting the FiT for rooftop solar which reduces the energy bills for millions of homes and businesses is not defendable. The Government promised to support solar on the roof but have totally acted against what was repeatedly said by senior Government figures, as proposed caps would limit new residential solar installations to around 22,000 per year and commercial installations to just over 100.
It very much looks like the Government has not listened to the industry and have acted on the basis of bad advice! In my view, this is not just a simple case of reducing FiT to reflect the market situation, these proposed tariffs will wipe out 95% of the solar industry in the UK and will only make it viable for a very small number of independent electricians. Basically back to where we started in 2010!
We urge DECC and the decision makers at the Treasury to re-think their strategy, look at the proposed numbers and mechanisms which absolutely do not make sense and make the necessary adjustments accordingly.
Although we must take the proposed changes on face value due to the nature of the consultation process, we will take these very seriously and over the course of the next few weeks will work with our members to demonstrate to the Government how wrong this proposal is. We will convey our messages to the Prime Minister and George Osborne directly and will seek their intervention."The Consultation paper and supporting documents can be found here:
https://www.gov.uk/government/consultations/consultation-on-a-review-of-the-feed-in-tariff-scheme