Government cuts PV industry some slack with revised Feed-in Tariffs

The Department of Energy and Climate Change (DECC) has announced the new Feed-in Tariff (FiT) rates for 2016 and beyond, which are higher than the government’s original proposed rates.

Although higher than the proposed level in this autumn’s consultation, for the majority of installations the new rates still represent a significant cut. For small domestic-scale installations (less than 10kW) the FiT rate will be reduced from 12.47p/kWh to 4.39p/kWh, when the original proposal suggested a rate of just 1.63p/kWh.

The rate for solar installations of 10-50kW has been cut from 11.30p/kWh to 4.59p/kWh and the rate for installations of 50-250kW has been reduced from 9.21p/kWh to 2.70p/kWh, although both rates are higher than the original proposals.

FiT rates for wind have also been cut, although not as dramatically, with installations of less than 100kW being reduced from 13.73p/kWh to 8.54p/kWh.

Rates for small hydro installations (less than 15kW) have also been cut by almost 50%, from 15.45p/kWh to 8.45p/kWh. However, FiT rates for large hydro schemes of over 2,000kW have been almost doubled from 2.43p/kWh to 4.43p/kWh.

The new tariffs will come into force from 8 February, and the deadline for projects to receive the current higher tariffs is now 15 January.

In total DECC received nearly 55,000 written separate responses to the consultation, including 2,634 unique responses and 52,000 as part of email campaigns run by Greenpeace.

The solar industry cautiously welcomed the announcement. Jonny Williams, director of the BRE National Solar Centre, told Construction Manager: “It is positive that the government has listened to local and international pressure to continue its support for solar PV. While the response is far from perfect, it is better than having no incentive in place.

“Over the next three to four years industry is committed to reducing subsidy support and competing on price. In the medium term it is crucial for the solar industry to continue to better integrate with construction – we’re now starting to see this happen through home builders and major developers.”

Paul Barwell, CEO of the Solar Trade Association, said: “Government has partially listened. It’s not what we needed, but it’s better than the original proposals, and we will continue to push for a better deal for what will inevitably be a more consolidated industry with fewer companies.”

According to the Solar Trade Association, which cites a Barclays report that says homebuyers are willing to pay an extra £2,000 for a house with solar panels and improvements in battery technology, photovoltaics are still a viable investment. 

Barwell added: “Our initial analysis shows solar is still worth considering if you consider the wider benefits such as the increased value to your home. Homeowners can also benefit by changing the way they use their generated electricity through higher daytime usage or via storage which is now a rapidly developing market.”

Along with the cuts the government has placed a maximum cap, of £100m, that it will spend on new installations divided between technologies between early 2016 to the end of 2018/19.