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The UK Department of Energy and Climate Change (DECC) has published the results of its latest feed-in tariff comprehensive review, effective August 1. Due to low deployment levels since April the government decided to push back the implementation of the tariffs by a month. The new rates for 4kW systems will be £0.16/kWh and the payback time reduced from 25 to 20 years.
The report states that the tariffs have been designed to offer a rate of return of 4.5% to 8% for a typical installation. DECC also proposed a degression method which would involve three-monthly tariff changes, a baseline degression of between 3.5 and 28%, depending on the rate of deployment and skipping the degression altogether if deployment is low.
Effective April 1, three new requirements have been initiated before a FiT can be implemented:
The Supreme Court has rejected the UK government’s appeal over cuts to the domestic feed-in tariff scheme. In the latest of three court cases, judges upheld the decision of a judicial review that ruled the department of energy and climate change’s (DECC) proposed revisions to the FiT were “legally flawed”.
The Supreme Court’s decision is final and the department will not be taking the appeal any further. Alasdair Grainger from DECC’s feed-in tariff team confirmed that they would not take the case to the European court if the case was lost.
The court’s verdict marks the end of a four-month period of uncertainty for the UK solar market. During which, installers of solar PV in the UK were unable to tell customers what feed-in tariff rate they would receive for their installation.
The UK solar industry has been fighting an uphill struggle these last few months against the government. In January, the UK Court of Appeal upheld a High Court ruling that the Department of Energy and Climate Change acted illegally over planned cuts to FiTs. Subsidies for all solar PV systems registered on or after December 12, 2011, will return to previous levels until March 3, 2012, however, the government intends to challenge this ruling at the Supreme Court. The ruling is unlikely to be forthcoming until after March 3.
The UK Government plan to significantly reduce carbon emissions in the country by introducing renewable energy sources; this involves a reduced carbon emissions target of 35%, which has been set for the year 2020, and at least 80% by 2050. These policies were outlined by the former Labour Secretary of State for Energy and Climate Change, Ed Miliband in, "The UK Low Carbon Transition Plan, National strategy for climate and energy" White Paper.
The new Conservative/Liberal Democrat coalition government, formed on May 11, 2010 outlined more plans for the future of the UK energy market, aiming to get rid of the RO scheme and place an emphasis on feed-in tariffs.
The FiT is being labeled the "Clean Energy Cash-back Scheme," most likely so that people fully understand what its purpose is. The introduction of an FiT rate on April 1, 2010 was a conscious decision by the former UK government to simplify the incentives surrounding using renewable energy sources (RES).
The cash-back scheme will run from April 2010 for most RES, The Solar Heat Incentive (we're assuming this means solar thermal) will begin in April 2011.
The UK feed-in tariff rates have now been finalized, offering residents a financial incentive for producing renewable energy. The government has confirmed the proposed rate of 41.3p/kWh, which began to take effect from April 1, 2010. The other tariffs, for different sized systems, can be seen in the table below:
| Energy Source | Scale | Feed-in tariff (pence/kWh) | Duration (years) |
|---|---|---|---|
| Solar PV | ≤4 kW new | 36.1 | 25 |
| Solar PV | ≤4 kW retrofit | 41.3 | 25 |
| Solar PV | >4-10kW | 36.1 | 25 |
| Solar PV | >10 - 100kW | 31.4 | 25 |
| Solar PV | >100kW - 5MW | 29.3 | 25 |
| Solar PV | Standalone | 29.3 | 25 |
From 1 April householders and communities who install solar photovoltaic panels of up to 5MW will be paid for the renewable electricity they generate, even if they use it themselves. The level of payment depends on the technology and is linked to inflation.
There have been several rumblings surrounding possible FiT cuts in the UK of late, as well as the possibility of removing the subsidy for large-scale generation. The UK Spending Review decided that the FiT would be left alone until 2012, when it will be submitted for review and possibly changed in 2013. Industry bodies will lobby against the anti large-scale decision, keep an eye on this page for further details.
The Department of Energy and Climate Change (DECC) has crushed hopes that the UK’s solar industry would have a large-scale future. The country’s Government has revealed that it plans to go ahead with proposed tariff cuts, which decrease large-scale incentives down to 8.5p per kilowatt hour.
The fast-track review, which the UK Government has been consulting on since new tariff rates were proposed on March 18, looked at reducing the tariffs for PV systems over 50kW in order to protect the money available for small-scale projects.
Energy and Climate Change Minister Greg Barker said, “I want to drive an ambitious roll out of new green energy technologies in homes, communities and small businesses and the FiT scheme has a vital part to play in building a more decentralised energy economy.
"We have carefully considered the evidence that has been presented as part of the consultation and this has reinforced my conviction of the need to make changes as a matter of urgency. Without action the scheme would be overwhelmed. The new tariffs will ensure a sustained growth path for the solar industry while protecting the money for householders, small businesses and communities and will also further encourage the uptake of green electricity from anaerobic digestion.”
The new tariffs (below) will go ahead from August 1, 2011 and will apply to all new market entrants.
>50 kW – ≤ 150 kW Total Installed Capacity (TIC) - 19.0p/ kWh
>150 kW – ≤ 250 kW TIC - 15.0p/ kWh
250 kW – 5 MW TIC and stand-alone installations - 8.5p/ kWh
The DECC received over 500 responses to the review, which it claims were carefully analysed before a decision was made regarding the change in tariffs. The fast-track review reportedly revealed that the number of planned larger PV projects was much higher than originally expected.
“Without urgent action, the scheme would have been overwhelmed within a very short period of time. Every 5MW large scale solar scheme would incur a cost of approximately £1.3 million per year, which means that 20 such schemes would incur an annual cost of around £26 million, money that could support PV installations for over 25,000 households,” outlined the DECC’s press release.
The changes will now have to go through UK Parliamentary and State aid clearance. Solar schemes under 50kW are not affected by this review.
The Department of Energy and Climate Change (DECC) has published its consultation document for the comprehensive review of solar feed-in-tariffs (FiT). They have proposed to cut the FiT rate for solar PV by more than 50% although this is of course subject to consultation.
Greg Barker, Energy and Climate Change Minister, said, “The plummeting costs of solar means we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FiTs scheme. Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”
These new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after December 12, 2011. These installations would receive the current tariff rates before moving to the lower tariffs on April 1, 2012. DECC reiterates that consumers who already receive FiT payments will not be subject to change and those with an eligibility date on or before December 12 will receive the current, higher rates for 25 years.
The eligibility date of a project is based on it being commissioned and having its request for accreditation received by a FiT licensee for schemes up to 50kW or Ofgem for those above 50kW.
DECC maintains that the proposed new tariffs will offer a rate of return of around 4.5% to 5% index linked and tax free (for domestic installations) for “well-situated solar PV – broadly comparable to that intended when the scheme was set up.”
The table below shows the current and proposed generation tariffs for solar PV:
| Band (kW) |
Current Generation Tariff (p/k Wh) |
Proposed Generation Tariff (p/k Wh) |
| ?4kW (new build) | 37.8 | 21.0 |
| ?4kW (retrofit) | 43.3 | 21.0 |
| >4-10kW | 37.8 | 16.8 |
| >10-50kW | 32.9 | 15.2 |
| >50-100kW | 19 | 12.9 |
| >100kW-150kW | 19 | 12.9 |
| >150kW-250kW | 15 | 12.9 |
| >250kW-5MW | 8.5 | 8.5* |
| stand alone | 8.5 | 8.5* |
* These are the current tariffs, which we are not proposing are changing and which, like all other current tariffs, will be adjusted in line with the Retail Price Index from April 1, 2012.
The comprehensive review consultation is due to close on December 23, 2011.
