Solar tariffs expected to be cut to 21p per kWh
The government is planning to halve feed in tariff incentives for solar photovoltaic (PV) 4kW or smaller from December this year, according to a document mistakenly published by the Energy Saving Trust.
A fact sheet posted on the Trust’s website dated 26 October details proposed changes to FITs that are expected to be announced in a consultation by the Department of Energy and Climate Change (DECC) next week.
The document appears to confirm that as expected the government will cut the rate of feed-in tariffs for solar PV installations with under 4kW of capacity to 21p/kWh, a reduction of more than half on the current 43p/kWh level.
The document also reveals that the cuts will effectively apply from 8 December this year.
However, the Department of Energy and Climate Change (DECC) issued a statement on Twitter this morning claiming the document is “neither final nor accurate”.
A spokesman told BusinessGreen that the full proposals willbe announced in parliament on Monday.
The fact sheet states: “A reduced rate of 21p/kWh for solar PV installations < 4kW - tariffs will be introduced from 1 April 2012 and will affect all installations with an eligibility date on or after 8 December 2011… This tariff rate is designed to provide householders with a rate of return of around 4 per cent. “
In addition, the fact sheet confirms plans to ensure households meet minimum energy efficiency standards before they can receive feed-in tariffs.
“From 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level C or above/which has completed all “Green Deal” measures,” the document states. “Where a domestic property does not meet these energy efficiency requirements, the Solar PV installation may receive a lower tariff.”
Howard Johns of the Solar Trade Association described the proposals as a “nightmare”, warning that the cuts would have a chilling effect on the industry.
“It makes [Climate Change Minister] Greg Barker’s speech yesterday look like the flannel that it was,” he told BusinessGreen, referring to the minister’s assurance that he had no plans to kill off the solar sector.
The industry has called for feed-in tariffs to be cut in line with reductions in the cost of solar panels, but experts have repeatedly warned that cuts of around 50 per cent would cripple the industry and result in the closure of financing schemes that provide households and businesses with free solar panels.
Speaking yesterday in response to reports the tariffs would be cut to around 20p per kWh, Seb Berry of solar firm Solarcentury said:”This will kill interest in solar PV for social housing and free schemes,” he said. “It reduces the rate of returns to under five per cent and no investor will go near that.”
His comments were echoed by Dave Sowden of the Micropower Council who warned that demand for solar panels would now be restricted to rich households.
“It appears they have tried to calibrate it down to five per cent returns,” he said. “We agree they needed to recalibrate it back to five to eight per cent returns, but if you go below five per cent then you completely wipe out free solar and social housing schemes. It just becomes a rich man’s game.”
The Energy Saving Trust document said that under the proposed changes it will now take 18 years for a 2.9kW system, eight years longer than at the current levels.
It also argued that the new four per cent rate of return was more “appropriate” than the original five to eight per cent rate due to the changes in the investment market that has seen interest rates slashed.
The Energy Saving Trust failed to respond to request for comment at the time of going to press.
By James Murray, Jessica Shankleman
A fact sheet posted on the Trust’s website dated 26 October details proposed changes to FITs that are expected to be announced in a consultation by the Department of Energy and Climate Change (DECC) next week.
The document appears to confirm that as expected the government will cut the rate of feed-in tariffs for solar PV installations with under 4kW of capacity to 21p/kWh, a reduction of more than half on the current 43p/kWh level.
The document also reveals that the cuts will effectively apply from 8 December this year.
However, the Department of Energy and Climate Change (DECC) issued a statement on Twitter this morning claiming the document is “neither final nor accurate”.
A spokesman told BusinessGreen that the full proposals willbe announced in parliament on Monday.
The fact sheet states: “A reduced rate of 21p/kWh for solar PV installations < 4kW - tariffs will be introduced from 1 April 2012 and will affect all installations with an eligibility date on or after 8 December 2011… This tariff rate is designed to provide householders with a rate of return of around 4 per cent. “
In addition, the fact sheet confirms plans to ensure households meet minimum energy efficiency standards before they can receive feed-in tariffs.
“From 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level C or above/which has completed all “Green Deal” measures,” the document states. “Where a domestic property does not meet these energy efficiency requirements, the Solar PV installation may receive a lower tariff.”
Howard Johns of the Solar Trade Association described the proposals as a “nightmare”, warning that the cuts would have a chilling effect on the industry.
“It makes [Climate Change Minister] Greg Barker’s speech yesterday look like the flannel that it was,” he told BusinessGreen, referring to the minister’s assurance that he had no plans to kill off the solar sector.
The industry has called for feed-in tariffs to be cut in line with reductions in the cost of solar panels, but experts have repeatedly warned that cuts of around 50 per cent would cripple the industry and result in the closure of financing schemes that provide households and businesses with free solar panels.
Speaking yesterday in response to reports the tariffs would be cut to around 20p per kWh, Seb Berry of solar firm Solarcentury said:”This will kill interest in solar PV for social housing and free schemes,” he said. “It reduces the rate of returns to under five per cent and no investor will go near that.”
His comments were echoed by Dave Sowden of the Micropower Council who warned that demand for solar panels would now be restricted to rich households.
“It appears they have tried to calibrate it down to five per cent returns,” he said. “We agree they needed to recalibrate it back to five to eight per cent returns, but if you go below five per cent then you completely wipe out free solar and social housing schemes. It just becomes a rich man’s game.”
The Energy Saving Trust document said that under the proposed changes it will now take 18 years for a 2.9kW system, eight years longer than at the current levels.
It also argued that the new four per cent rate of return was more “appropriate” than the original five to eight per cent rate due to the changes in the investment market that has seen interest rates slashed.
The Energy Saving Trust failed to respond to request for comment at the time of going to press.
By James Murray, Jessica Shankleman
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