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REA wrath over UK solar subsidy reductions

The Fast Track consultation on the UK feed-in tariffs have been published, sparking anger among the industry with warnings that it could leave UK solar “strangled at birth.”

By Renewable Energy Focus staff

A review of the UK’s feed-in tariffs was announced early February with a promise of a fast-track consideration of solar power projects.

As part of the fast track consideration Minister for Climate Change, Gregory Barker, now says the Government is seeking views on proposals to changes to tariffs for solar photovoltaic (PV) installations larger than 50 kW and farm-scale anaerobic digestion (AD) of up to 500 kW.

The proposed new bands and tariffs are as follows:

For large solar PV installations:
  • >50kW - ≤150kW: 19p/kWh
  • >150kW - ≤250kW: 15p/kWh
  • >250kW - ≤5MW: 8.5p/kWh
For farm scale AD installations:
  • ≤250kW: 14p/kWh
  • >250 - ≤500kW: 13p/kWh

Barker says 92% of domestic-scale solar PV generators will not be affected by the proposed changes: “The FITs scheme has been a success since its launch in April 2010 with over 27,000 FITs installations registered to date, of which 92% are domestic-scale solar PV generators, which are not affected by the proposed changes in the fast track review. The FITs scheme rewards generators for the green electricity they produce, use and sell back to the grid.

“We want to protect the diversity of the FITs scheme, and ensure that it benefits homes, small businesses and communities, and the full range of innovative technologies.”

He adds: “Current market indications are that a rapid increase in the number of larger solar installations entering the scheme could distort funding for smaller and domestic scale installations as well as other technologies. Conversely the current tariff levels have failed to spur a meaningful uptake for anaerobic digestion which means that this technology is not fulfilling its potential contribution to our energy mix.”

The Government is seeking views on the proposed tariffs until 6 May 2011, and proposes that changes take effect from 1 August 2011.

REA: Leaving solar industry “strangled at birth”

The Renewable Energy Association (REA) says the 39-49% cuts proposed for roof-mounted solar PV schemes over 50 kW makes them “totally unviable”.

Gaynor Hartnell, Chief Executive at REA, says: “Larger PV projects are cheaper, and have a major role in driving down costs. We don’t want boom and bust in this sector either, but pulling the rug out from under the feet of those that have ventured into this market was precisely the wrong response. The UK will return to the solar slow-lane.

“It’s as good as a retrospective change and that does untold damage to investor confidence. It’s not acceptable and we will fight it.”

Ray Noble, REA’s PV Specialist, adds: “This is far worse than anticipated. This industry has been strangled at birth.”

In a support document, REA accuses DECC of “salami-slicing the sector to fit a Treasury-imposed reduction in expenditure in the FiT scheme of 10% by 2014/15 without understanding industry structure, or accounting for the exceptional and proven potential of this technology.”

Howard Johns, Chairman of the Solar Trade Association, says: “The solar industry is one of the genuine good news stories in the UK today, providing both jobs, a new green industry and importantly some hope. Crushing it at this time is a serious strategic mistake but inevitable when it appears to be Treasury, not DECC, dictating energy policy.”

REA also points out that DECC bases its decision making on a mid-range fossil fuel price scenario assuming oil costs of US$80 per barrel in 2020. Currently, the price for a barrel of oil is over US$100.

The association concludes that the Government’s strategy is based on a flawed logic.

REA's assessment of the solar PV feed-in-tariff review:

Old bands and ratesNew band and ratesImplications
10-100 kW31.4p50-150 kW19pNot commercially viable
100 kW - 5 MW29.3p150 - 250 kW15pNot commercially viable
250 kW - 5 MW8.5p
Stand alone29.3pStand alone8.5pNot commercially viable

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Photovoltaics (PV)  •  Policy, investment and markets