UK FiT cuts were avoidable, according to Ernst & Young report

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  The Ernst & Young paper suggests that the UK Government could have introduced less severe tariff cuts
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  Average annual cost per household of FiT for all technologies

Financial giant Ernst & Young has published a paper on the UK solar industry that claims the Government could have avoided the draconian subsidy reductions it imposed on large-scale projects, reports Solar Power Portal.

Two weeks ago, to the dismay of both the UK and worldwide solar industries, Energy and Climate Change Minister Greg Barker revealed that the Government would be going ahead with its proposed feed-in tariff (FiT) changes that would slash large-scale incentives to just 8.5p/kWh for systems over 250kW.

However, Ernst & Young’s UK Solar PV Industry Outlook Report, commissioned by the Solar Trade Association (STA), makes it clear that not only is the Coalition Government’s choice detrimental to the future of solar but there were other, financially-viable, options available.

The paper argues that marginally higher FiT rates of between 20p and 24p/kWh for installations between 50kW and 5MW would result in an internal rate of return of 5% for project developers, thus allowing some of the larger solar farms and community-backed projects to still go ahead. In fact, if introduced alongside a net metering scheme, rates as low as 16p to 21p/kWh could still have offered enough buoyancy to keep larger systems afloat.

These findings, allied with the expected decline in silicon prices that could see grid parity achieved as early as 2017, make the Government’s decision all the more baffling. Consequently, the STA is now calling for informed decision making based on a transparent framework and an accurate analysis of the potential and role for solar in the UK.

To read the full report, click here.