Solar industry welcomes clarity on FITs

25 May 2012, source edie newsroom

Businesses have largely welcomed government plans to cut the Feed-in Tariff (FIT) rates from August 1 - rather than July 1 as previously proposed.

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Unveiling the changes earlier this week climate change minister Greg Barker said that the new regulations will put the FITs scheme on a "more predictable, certain and sustainable footing for householders, businesses and the solar industry".

From August 1, the new tariff for small domestic solar installation will be 16p KWH, down from 21p.

However, businesses have reacted warily to plans which will see the tariff further decrease every three months, with pauses if the market slows down.
All tariffs will continue to be index-linked in line with the Retail Price Index (RPI) and the export tariff will be increased from 3.2p to 4.5p.

According to DECC, the new tariffs should continue to give a return on investment (ROIs) of over 6% for most typical installations, and up to 8% for the larger bands.

Mr Barker said: "The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing today provide a strong, sustainable foundation for growth for the solar sector.

"We can now look with confidence to a future for solar which will see it go from a small cottage industry, anticipated under the previous scheme, to playing a significant part in Britain's clean energy economy."

He added UK solar continues to be an attractive proposition for many consumers, and that the changes will place the subsidy support on a "long-term, sustainable footing", therefore enabling industry to "plan growth with confidence".

Solar Trade Association said that it broadly welcomed many of the Government's decisions on the FITs scheme and the inclusion of solar in DECC's updated Renewables Roadmap.

(STA) chairman Alan Aldridge said: "This should reassure consumers and solar companies alike that the Government recognises and stands behind a major role for the solar industry.

"Despite the currently slow market, the industry can have some confidence that the new tariffs are tight but workable."

Solarcentury largely echoed this view, although said it would continue to challenge the Government on solar progression - until the technology becomes a key part of the UK's energy mix.

Solarcentury chairman Jeremy Leggett, said: "Though investor confidence will remain uncertain given the proposed three-monthly digressions, the majority of the government's policies may herald a new seriousness of intent on solar, and indicate that a meaningful solar industrial policy is now a real prospect for the UK."

Renewable solutions provider Myriad CEG, said it hoped the announcement would kick start the solar industry and create commercial benefits for businesses.

However, Myriad CEG managing director Phil McVan also warned that certainty was need.

He said: "Uncertainty over the cuts has harmed the industry and highlighted the government's continuing "lack of consistency" when it comes to green energy.

"What is now needed is a period of certainty to allow businesses to plan and deliver whilst restoring the confidence of customers who in uncertain times have 'sat on their hands'."

However, renewable energy company Eco Environments slammed the Government for leaving consumers with a "sting in the tail" , arguing that while return on investment remains attractive that consumers will earn considerably less.

Eco Environments director David Hunt, said: "We are pleased that Ministers have listened to the deluge of complaints from the solar industry about the scale and speed of the cuts proposed in their consultation document earlier this year.

"But we are also disappointed that the Government still seems hell-bent on making life very difficult for the solar industry and the tens of thousands of jobs dependent on it as well as for consumers who are weighing up the pros and cons of investing in solar PV."

Carys Matthews