Watch out! The supposed 21p PV FIT subsidy is NOT set in stone…

This is our comment on the status of the proposed 21p/kWh tariff for solar PV systems installed after 12 December 2011, based on some helpful membership documentation supplied by the Micropower Council.

What are the main issues?

• Time and sums. UK Government is consulting until 23rd December 2011 on a proposal to reduce the Feed-in-tariff payable from 1 April 2012 to sub 4kW installations of solar photovoltaics (PV) from its current level of 43.3p/kWh to 21p/kWh for PV  installed from 12 December 2011 onwards.
• Government further proposes that the new FIT rate be even lower, at 16.8p/kWh from 1 April 2012 for so-called “aggregator schemes” – principally social housing projects and so-called “rent-roof” or “free solar”. Other, lower, rates apply to the non-residential sector.
• Obviously solar PV installers (such as us!) must NOT promote the 21p/kWh rate to consumers in terms which imply it to be more certain than it actually is, because, at present, 21p/kWh is uncertain and it is only part of a consultation figure.

If 21p/kWh is not certain, then what is the situation?

• 21p/kWh is only a proposal, upon which Government is consulting until 23rd December.

• The 21p/kWh could certainly change; whether it does or not will depend on the responses the Government receives to the consultation, and any other factors Ministers consider relevant before they announce the final outcome.

When will we all know?

• Government says it hopes to respond to the consultation in January 2012 and will need to do so by 8 February 2012 at the latest, if rates are to be changed from 1 April 2012.
• Government also says it is aware the industry needs certainty as soon as possible and will strive to announce before this date.

Why can’t Government confirm 21p (or whatever) much sooner?

• The consultation closes on 23rd December. Following this, a proper due process requires the relevant Ministers (in the Department for Energy and Climate Change) to give proper consideration to all the responses, apply any other considerations they consider relevant, AND get its final decisions cleared by the relevant Cabinet Committee.
•  This process takes time – apparently over 1500 responses to the consultation have already been received, and there will certainly be more before the deadline. All these need to be properly considered, and the evidence from them properly weighed up. If the Government cannot demonstrate it has done this properly, it risks losing a judicial review on its final decisions.
• Whilst DECC has indicated its wish to progress to a decision as quickly as possible, the volume of responses will make it difficult to turn around the process in less than a month. On all previous occasions, final decision announcements have taken place on the last possible date consistent with meeting the Government’s implementation deadline.

What is wrong with solar suppliers promoting a 21p rate at this stage?

• Illustrating is not promoting. There is nothing wrong with illustrating how a prospective customer’s system would perform at 21p/kWh, provided the customer is made fully aware that the 21p is subject to consultation, and that the final number could be different.
• Government has actually highlighted to trade bodies the need to be particularly careful about consumer protection right now.

Where does this lack of certainty leave UK’s aspirant solar PV consumers (and industry) in the meantime?

• Consumers. Regrettably, in a very difficult position. In effect there is a hiatus between 13 December and the (as yet unknown) date on which the final decisions are announced, so apart from being given consultation figures, on which there remains uncertainty, solar PV customers cannot be promised any particular level of tariff with any degree of certainty.
• Industry. The industry has made strong representations that this uncertainty is most unsatisfactory,  since it will probably last for at least a seven weeks.
• DECC. Unfortunately it appears DECC’s hands are tied by the legal process, and there is little that can be done save to await the final tariff decisions being announced.
• Challenges. There are at least three separate legal challenges to the consultation process – it is possible that the court might decide to impose changes in the meantime, but this action looks highly unlikely to appear as a matter of voluntary choice by DECC.

Conclusion: if solar PV sales people are promising you a certain 21p, please take it with a pinch of salt. What is certain is that there is a £300 subsidy available for solar thermal. Ask us for a quote now!

I hope this is useful. Sunny best wishes from Barry.