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Does the cap fit?

The long term level of financial incentive to stimulate take up of solar PV may finally be FIT for purpose, according to Griff Thomas, technical manager for renewables at ELECSA, the leading renewable energy certification body.

From July 2012 the level of the Feed in Tariff (FIT) could help reinvigorate the sustainable take up of solar PV and help smaller installers to diversify into renewables.

However there is still short-term uncertainty over the level of the FIT between now and April as energy minister Greg Barker announced that DECC would appeal to the Supreme Court over a High Court ruling that the Government had acted unlawfully by halving the subsidy from 43.3p to 21p per kw/h before the end of the official consultation into the level of hand-out.

“That decision prompted a gold rush of solar installations ahead of the artificially created 12 December deadline for 43.3p. This had a negative impact upon the level of the FIT going forward and created uncertainty for many installers who had invested heavily in renewable technology as part of their business plans,” said Griff Thomas, Technical Manager, Microgeneration & Renewables at ELECSA, the certification arm of the ECA.

“Looking beyond the legal action, the Government strategy is looking more sustainable for Microgeneration Scheme Certificate (MCS) holders as there will be a FIT going forward, whereas the fear was that there would be no money left in the pot.”

“We must keep a sense of perspective because the FIT was always going to be gradually reduced in line with take up once the renewables industry had been kick started and householders had become more accepting of the alternatives available to take more control of their household bills. It was never meant as a permanent payment,” he added.

Up until July, the FIT will be pegged at 21 pence for installations with an eligibility date from March 3. From July the proposal is that future FIT rates will be linked to total installed capacity, adjusting the rates paid to reflect the amount of work being done. The volume of installation work will be monitored between 3rd March and the end of April. A higher than anticipated installation base will have a more dramatic effect on the future tariff rate in order to manage the ongoing budget situation. If it is lower than expected the cut will be less severe to keep the market stimulated.

On the future of the feed in tariffs more generally, the Government’s new consultation outlines an ongoing programme of six-monthly ‘degression’ for solar PV tariffs that builds in automatic reviews and triggers for the industry to ensure that surprise cuts do not disadvantage businesses. There are also proposals to reduce the period for which solar PV tariffs should be applied from 25 to 20 years and having a link to the energy efficiency of the property.

From July 1, properties with Band D energy performance or better will be able to qualify for FIT payments. This has been downgraded from energy band C in line with industry comment to be more inclusive so will attract more take-up. Properties that have an energy performance rated lower than D will only qualify for the stand alone rate of 8.9p. “This has been criticised by green groups, but realistically the government position is not simply across solar, but also for other tariffs including small scale wind.

Governments in other parts of Europe are also reviewing downward their FITS in line with the long-term gains and the affordability of the programmes, and the need for Government to wean the industry off subsidies,“ added Thomas.

The consultation will close on 3 April 2012. The Government has suggested that the proposals will allow for greater forward planning and budgeting for households and businesses whilst protecting the taxpayer from subsidising the industry when prices fall.

The Government has published its outline thinking on what the FIT rates will look like be based upon assumptions of usage and energy efficiency initiative uptake. DECC’s model includes:

• A tariff of 21p/kWh will take effect from 1st April this year for domestic-size solar panels with an eligibility date on or after 3rd March 2012. The tariff is scheduled to reduce in July 2012 (with several options put forward dependent on total installed capacity).
• Properties installing solar panels will from 1st April have to have an Energy performance rating of D to qualify for full FIT payments.
• Those properties that do not meet this energy efficiency requirement will receive a lower tariff level, starting at 8.9p in April 2012. The tariff is scheduled to reduce in July 2012 (with several options put forward dependent on total installed capacity).
• There will be a new ‘multi installation’ tariff to take into account the economies of scale achieved by businesses and organisations who are benefitting from more than 25 installations. This will be 80% of the tariff applied to the individual solar PV installations.
• The Government is proposing that ‘community-owned’ installations, such as those installed by social housing landlords, may be treated differently to commercial operators. The Government is seeking opinion on how community-owned installations are to be defined, and what fair and sustainable tariff rates may be applied.
• The subsidy levels will be tied to falling costs (with suggested changes every 6 months to reflect falling prices and an inbuilt warning system to the industry to give notice).

This was posted in Bdaily's Members' News section by Tom Keighley .