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Disappointment over UK feed-in tariff review

A common theme among the responses to the UK’s revised feed-in tariffs for solar photovoltaics (PV) and anaerobic digestion, has been one of disappointment.

By Renewable Energy Focus staff

Andrew Lee, Head of International Sales at Sharp Solar, says: “We are disappointed at the Government’s decision to go ahead with the proposed changes to the feed-in tariff. During these difficult economic times [the] announcement risks stifling job creation in an industry which has the potential to flourish in the UK. A limit of 50 kW is extremely low and will affect community projects and small businesses, as well as potentially hamper growth to the UK economy.

“While the UK is facing growing concerns about rising fuel costs we should be encouraging the renewable energy market and not putting pressure on it. We therefore urge the Government to rethink its decision. The solar industry has only just started to see real growth; [the] announcement will halt this growth in its tracks. Sharp looks forward to working closely with the government and the industry to find a way forward ahead of the first full review of the feed-in tariff next year.”

Danger of inconsistency

David Nickols, Director of WSP Future Energy, says: “This process illustrates the absolute criticality of consistency in Government policy, especially around incentives and regulatory structures intended to attract private investment. Any more tinkering with other incentives could undermine the confidence of investors in the future financial security of their renewables schemes.

“The revised feed-in tariff structure also inhibits commercial-scale rooftop solar projects, which is disappointing as installations at this scale should be an important method of boosting the UK’s supply of renewable energy.

“However, we are pleased to see tariffs for small-scale systems remain unchanged.”

Bad news for many

Dave Snowden, Chief Executive of the Micropower Council, says: “This is bad news for many worthwhile projects – schools, communities, public buildings. The Government was clear from last November it intended to act on large-scale, field-based solar, but took the entire Built Environment sector completely by surprise when announcing the review, and we are disappointed it has not been persuaded to recognise the merits of projects in this sector or recognise the impact on investor confidence surprise announcements can have.

“However we now need to draw a line under the feed-in tariff review and focus on helping the Government during the forthcoming Comprehensive Review of the entire scheme so it redesigns all the tariffs and their degression principles to grow the industry sustainably, whilst living within the constraints of the available budget this side of 2015. We would of course be delighted if this budget were increased this side of 2015, but believe calls to double the funding during this period is unrealistic given public expenditure cuts across the whole economy.

"It is now critical that the Government sticks to the timetable for the rest of the review – new tariffs announced in December after propoer and informed consideration of the evidence, and implemented next April, if we are to maintain investor confidence after this difficult time for many sectors during the fast-track review. We do not support calls elsewhere for immediate, arbitrary cuts of 25% - such a move would shatter investor confidence, confuse consumers and set the industry back several years.

“In the longer term, we also need to start now to build the case for a significantly more ambitious feed-in tariff scheme during the next Spending Review Period (2015 onwards) so that all forms of sustainable electricity production from buildings can be scaled up and costs brought down quickly.”

Lacking ‘manure bonus’ for farmers

The President of the Country Land and Business Association (CLA), William Worsley: “CLA members have between them, spent more than £1 million trying to get large-scale solar projects off the ground and they relied on Government policy to guarantee their return on investment.

“Cornwall County Council, in one of the poorest parts of the country, has lost more than £200,000 on its project while support for domestic solar PV installed by richer urban householders has been preserved.

“The fast-track review of the feed-in tariff may have been necessary to avoid breaching the budget, but the CLA made the case for a transition scheme for large-scale projects that were granted planning consent before 1 August 2011 to ensure early adopters were not affected by cuts to promised payments.

“The review’s small increase in support for on-farm anaerobic digestion (AD) is welcome, although I am disappointed the Government has not yet taken up the CLA’s suggestion of a ‘manure bonus’ nor offered the higher rates we recommended to incentivise the smallest and most environmentally friendly biogas plants.

“We will continue to make the arguments for smaller scale AD as a compliment to farming, particularly in the light of the industry Greenhouse Gas Action Plan. We now look to the comprehensive review of the FiT rates to take effect from 1 April next year.”

AD support not enough

Simon Rigby, one of the founders of Farmgen: “The values will not stimulate the AD market as the rates of return will not attract investors or the banks at current capital cost levels. Capital costs need to come down as the Government have missed the opportunity to kick-start development by not offering enhanced FiTs even in the short term.”

Project Development Direct Ed Cattigan at Farmgen adds: “The biggest issue from our perspective is that the capital cost for a 500 kW system is the same as for a 600 kW system, so we are being driven to run larger engines inefficiently to get the higher FiT. If they had made the FiT for up to 500 kW 13p and 9.4p thereafter, rather than an arbitrary cut-off, this would have made more economical sense.”

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Bioenergy  •  Photovoltaics (PV)  •  Policy, investment and markets

 

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