‘Unsustainable’ FITs scheme cut again

Fears of 'boom and bust' in the solar industry have seen the government drastically cut back the Feed-In Tariff scheme (FITs).

Today (October 31) energy minister, Greg Barker, dealt what industry chiefs called a ‘double-edged smack in the teeth’ to the renewables sector.

Under the new proposal the government wants to introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh, reduced rates have also been put forward for schemes between 4kW and 250kW.

A consultation has been announced and will close on December 23, however new subsidy levels are due to come in to effect two weeks earlier on December 12.

This particular aspect of the consultation has angered industry figures the most, with accusations the government is only paying ‘lip service’ to them.

Mr Barker told the commons today: “The green economy does not exist in a vacuum and it is important, particularly in the current climate, that our approach to public subsidy is responsible and results in the widest possible deployment.

“To date, solar PV has been by far the most popular technology with consumers. We know that the costs of an average PV system have fallen by at least 30% since the FITs scheme started and we are aware of reports that the global costs of PV modules have fallen by as much as 70% since 2008.

“This is resulting in returns for investors in solar PV that are simply not sustainable and, without action, could result in the spending envelope for the scheme rapidly being breached.”
mr Barker also explained a ‘recent surge’ in households installing solar PV has threatened to break the budget.

There were more than 16,000 new solar PV installations in September alone – nearly double the number installed in June.

And nearly three times as much solar PV as projected has so far been installed with over 100,000 separate installations with over 400MW of capacity.

To solve this Mr Barker says new generation tariffs should apply from April 1 next year to all new solar PV installations which become eligible for FITs on or after December 12.

Freesource Energy managing director, Alex Lockton, said: “It seems the government are simply paying lip service to the idea of consultation.

“How can this be a genuine consultation when the new tariff rate is being introduced before the consultation period ends?

“The combination of the 50 per cent cut and the timing of its introduction is a double-edged smack in the teeth.”

Climate Energy Group managing director, Andrew Holmes, said: “Despite these changes, homeowners should not ignore the many benefits that solar PV offers, including tax-free income from FITs payments, albeit now reduced, and the generation of free electricity, both of which will help to reduce fuel bills considerably.

“And, as some experts estimate that household bills could rise by as much as £300 a year over the next eight years if we continue to rely on traditional fuels, alternative energy, such as solar, is now more important than ever.”

Greenpeace chief scientist, Dr Doug Parr, added: “Four years ago David Cameron was so committed to FITs that he mentioned them 46 times in a single policy paper.

“He should have faith in his own policies and keep FITs at a rate which supports the growth of a sustainable renewable power industry.”

The consultation can be found here.

Luke Walsh

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