Solar News: 24 May 2012.
Solar PV cuts clarified. Here is the latest DECC page on them. Here is our summary.
New nine weeks of solar PV gold rush expected to happen between today and 1 August because of…
- 5 pence Solar PV FIT tariff cut: from 21p to 16p per kWh.
- 5 year reduction in FIT payment duration: falling from 25 years to 20 years.
- 33% cut in lifetime subsidy income for typical PV installations installed after 31 July.
Today, Greg Barker Minister of State for DECC announced its plans to put the Feed-in Tariffs (FITs) scheme…
“on a more predictable, certain and sustainable footing for householders, businesses and the solar industry”.
Ministerial Statement in the House of Commons today.
“Today starts a new and exciting chapter for the solar industry. 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. I want to send a very clear message today. UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence. Following detailed consultation with industry and consumers, the Government is introducing a range of changes to the FITs scheme with effect from 1 August to provide better value for money and allow businesses and householders to plan with confidence. This is good news for the industry and for consumers and will ensure that as many people as possible benefit.
Today’s announcement in summary:
Tariffs for domestic solar PV installations will be reduced from 1 August instead of 1 July, as was proposed.
- 16p/kWh for household scale solar PV installations to reflect fall in cost of the technology
- Delivering a return of about 6% for a typical installation.
- This 5p cut is a MAJOR cut!
- Tariffs for larger installations also to be reduced to reflect cost reductions
- However most tariff cuts are lower than proposed in February.
- Delay to August is in recognition of low uptake from 1 April and providing time for industry to adapt.
Solar PV FIT scheme lifetime reduced from 25 to 20 years for new solar installations from 1 August.
- Reducing the lifetime costs of the scheme
- To bring solar in line with most other technologies supported under FITs.
- This 5 year cut is the other MAJOR cut, besides the 5p cut in FIT tariff.
Increase export tariff from 3.2p to 4.5p/kWh [This is welcome.]
- To better reflect the real value of electricity exported to the grid.
33% cut = the main financial impact of the PV cuts from 1 August.
- Over the 20-25 years subsidy lifetime of a domestic solar PV installation, we calculate that the combined changes means a typical 33% subsidy income reduction.
Further reduction in tariffs over time in line with uptake of FITs scheme
- Ensuring solar PV is not over subsidised.
- Average tariff reductions of 3.5% every 3 months
- BUT reductions will be bigger (up to 28%) if there is rapid uptake.
- AND Tariff cuts can be skipped (for up to 2 quarters) if uptake is low.
- Uptake in 3 different bands (domestic (size 0-10kW), small commercial (10-50kW) and large commercial (above 50kW and standalone installations) will determine the quarterly reductions within these bands.
RPI index-linking of generation tariffs to be retained
- Reflecting the high value investors place on this element of the FITs scheme.
- Good news because it preserves income security. No change.
Lower tariffs for installations which do not meet the energy efficiency requirements (EPC level D) will mirror the tariffs for standalone installations.
- Ensuring energy efficiency is still encouraged as tariffs are reduced.
- So no change here either.
- If you need an EPC, just call us and we can arrange it rapidly.
Also, for multiple homes schemes, the multi installation tariff is increased to 90% of standard tariff
- Organisations with more than 25 solar PV installations will get 90% of the standard applicable tariff.
- This is an increase from 80% allowed previously.
- Changes reflect new evidence on costs involved for these projects.
The UK’s stated ambitions for solar PV will fall from 22 GW to around 12 GW
- This huge fall in ambition is very disappointing at a national strategic level.
- We hope that other types of solar panels, such as solar water heating panels, can fill this huge gap.
- Lower ambition suggests that people will choose to buy now, before subsidies fall further on 1 August.
Many thanks to the British Photovoltaic Association for much of this material.
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