Today, Monday 31 October, Greg Barker has suggested that immediate action is needed to put the solar industry on a steadier, clearer and sustainable growth path, avoid boom and bust and protect the wider Feed-in Tariff scheme (FiTs).
In an effort to keep the FiTs scheme budget under control, proposals have been made to reduced subsidies for domestic solar electricity production.
The proposals, subject to consultation, would introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure those schemes receive a consistent rate of return.
Climate Change and Energy Minister Greg Barker said: ‘My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.
‘The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FiTs scheme.
‘Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.
‘Our proposal for an energy efficiency requirement, as well as the launch of the Green Deal next autumn, creates a massive opportunity for these firms to use their expertise to get a foothold in this exciting new market.
‘People who are now thinking of installing solar PV need to do so with their eyes wide open and I’d encourage them to call the Energy Saving Trust for the latest advice.’
Since the scheme was put into place the cost of an average domestic PV installation has fallen by at least 30 per cent – from around £13,000 in April to £9,000.
It’s been suggested that if Government fail to take action, by 2014-15 FiTs for solar PV would be costing consumers £980 million a year, adding around £26 (2010 prices) to annual domestic electricity bills in 2020. The new proposals will restrict FITs PV costs to between £250-280 million in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 (2010 prices) in 2020.
The new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2015. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2016. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before 12 December will receive the current rates for 25 years.
The Government will also, as part of its review into the FiTs scheme, consider whether more could be done to enable genuine community projects to be able to fully benefit from FiTs and whether, for example, a definition of community scheme is required and if so, how this should be defined.