Social housing solar developers prepare for latest cut to feed-in tariff

Local authorities and housing associations seeking to develop more than 25 solar electricity schemes will recieve a 20 per cent cut in the feed-in tariff from next week, under government plans to ensure the popular incentive scheme does not exceed its budget.

The government will introduce a “multi-installation” tariff rate for photovoltaic from April 1, meaning any organisation which is already receiving payments for 25 or more other solar PV installations will only receive 80 per cent of the standard tariff for new projects.

This change is also a more lenient version of the government’s initial proposal to include all community or corporate solar projects with 25 or fewer installations in the multi-installation rate.

Ministers are also consulting further on whether larger community and social housing schemes should also be exempt from deeper cuts.

However, Ray Noble, solar PV specialist for the Solar Trade Association, told BusinessGreen that the 20 per cent cut for aggregated schemes was still “too excessive” and urged the government to make a five per cent cut instead.

He maintained the pre-development costs for aggregated schemes can be more expensive than individual schemes even if they save money during installation.

“You do get savings through economies of scale, but often when local authorities and housing associations are working on projects they find the procedures quite costly, such as for legalities and developing contracts,” he said.

Any property registering for solar feed-in tariff from Sunday will also need to prove their property meets minimum energy efficiency standards.

Only homes and businesses with an energy performance rating of “D” or above will be allowed to install solar panels, meaning around half of properties will be allowed to qualify for the incentive without investing in additional efficiency measures such as insulation or double glazing.

The change is a significant relaxation of the government’s original proposal to limit feed-in tariff eligibility to those buildings that have the highest energy efficiency ratings, which would mean only 14 per cent of homes were eligible for the feed-in tariff.

In addition, installations with a capacity of 4kW or less which registered for the feed-in tariff from March 3 2012 will see their tariff cut from the current 43p/kWh rate to 21p/kWh from Sunday for the remaining 25-year payback period of the scheme.

However, those projects that were completed before March 3 will remain on the higher 43p tariff because the government has now lost a Supreme Court appeal to impose an effective cut-off date from December 12 2011.

The changes have been broadly welcomed by solar installers, who had warned that the government’s initial proposals would cut the industry off at its knees. However, they remain concerned about the prospect of further deep cuts to incentives this summer.

In related news, community group Repowering South London has today launched the capital’s first community owned inner city solar power project in Brixton.

Funding for the 37 kWp solar PV array was raised through a community share issue and those that invested will be guaranteed an annual return of up to three per cent through the feed-in tariff, with a portion going to a Community Energy Efficiency Fund for the community.

Investors were able to buy a stake for a minimum of £250 or maximum of £20,000 and the total raised was achieved in three weeks.

Howard Johns, managing direction and founder of Southern Solar which developed the scheme, said community solar schemes could play a key role in helping to reduce consumer energy bills.

“We are passionate supporters of community renewable energy initiatives and are delighted to have been so involved in this project”, he said.

“Giving communities the chance to invest in renewable energy helps to reduce energy bills, protects against rising energy prices, generates a return on investment, as well as protecting the environment, and solar PV is one of the easiest ways of making this change.”

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