Feed In Tariffs: Solar Farms put in the dark

This week saw the Government announce their proposals for changing the FiT scheme to stop the rapid growth of Solar Farms in the UK.

The Government felt that the scheme was being abused by the emergence of Solar Farms, which, they believe, were soaking up the majority of the subsidies. With the scheme being intended for more domestic and small scale commercial on-site energy generation, the Government has announced plans to change the tariff structure so as to remove the incentive for large scale installations.

The Government is proposing to cut the tariff rates for installations of over 50kW. The proposed tariff rates are set out below, with their current tariff rates (as of April 2011) shown first and the new rates shown thereafter:

As you can see, the tariff rates have been cut substantially for large scale developments – those above 50kW – with some tariffs being cut by 72%.

The Government has drawn a line in the sand at the 50kW installation size, but why 50kW? Well, this is the threshold for domestic solar PV Permitted Development Rights, above which the installation will need planning permission. Also, 50kW is a rather large system: it is 208 240W panels, that would require in excess of 200 square meters in space to install and would cost over £150,000 to purchase and install. The average domestic system is around 4kW. Thus, the Government feels, that schemes above this level are being orchestrated by people looking to exploit the scheme.

The interesting, and slightly more ambiguous, issue is that of standalone systems. Here, the Government is proposing to significantly reduce the tariff rate for ALL standalone systems, irrespective of their size. The original tariff for standalone systems was set lower due to expected lower installation costs, with system size not being a determining factor. Now the Government is proposing to cut this tariff rate to 8.5p, from 30.7p, without any regard for system size.

The new tariff rates are only propositions at the moment, and a public consultation is now under way, which is to be completed by May 2011. After this the final details will be announced and then the new tariff rates are expected to be in effect from August 2011. It must also be noted that these new rates are NOT retrospective. The new rates will only apply to new entrants. Existing installations and those in the process of being completed will receive the full, old, tariff rates.

We welcome the action on Solar Farms. We knew the scheme was not meant for this and believe that it was being exploited at the expense of the domestic and commercial sector. There is already a scheme in place, and has been for many years, for large scale systems, called the Renewables Obligation (RO). The fact that installations were registering under the FiT scheme, whilst being pulled from the RO scheme only highlighted the attractiveness of the FiT scheme. We welcome the fact that rather than allowing the scheme to be abused and then seeing the scheme close down early due to this exploitation, as has happened in a lot of European countries, the Government has handled this issue early and is trying to rectify the problem.

However, the issue of standalone installations appears to be incorrect. We hope that the Government realises this and rectifies the tariff rate to allow for smaller scale standalone installations. We will certainly be responding to the consultation and requesting such.

A link to the DECC announcement:

http://www.decc.gov.uk/en/content/cms/news/pn11_027/pn11_027.aspx

A link to the consultation document:

http://www.decc.gov.uk/assets/decc/Consultations/fits-review/1438-condoc-fasttrack-review-fits.pdf