UK Government slashes feed-in tariffs for solar power


UK Climate Change and Energy Minister Greg Barker today confirmed that the government will slash feed-in tariffs (FITs) for solar power by more than half.

He said that the proposals to cut the tariff for solar installations up to 4 kW in size from 43.3p/kWh to 21p/kWh would keep the FIT scheme’s budget under control and put the industry on a firmer footing.

There will also be reduced tariffs for schemes of between 4 kWh and 250 kWh, while from April next year any property applying for a FIT will have to meet a minimum energy efficiency requirement.

“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,” Barker said in a statement this morning. “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.”

According to the government’s figures, the cost of a typical photovoltaic installation has fallen from around £13,000 in April 2010 to £9000 now.

Leaving tariffs as there are would be costing consumers £980 million a year by 2014/15, adding £26 to domestic bills by 2020. But the government’s slashing of the tariff will only save around £3 on that figure.

The scheme has been a victim of its own success, with over 16,000 new photovoltaic schemes installed in September, nearly double that in June. The total now stands at 100,000 installations amounting to 400 MW of capacity – nearly three times as much as was projected.

But green group Friends of the Earth say that the figures show huge support for the scheme, which should not be financially capped.

“These figures prove there’s huge demand for home-grown clean power – but the scheme is threatened with the Treasury’s axe, putting thousands of jobs at stake,” says campaigner Paul Steedman.

The proposals, which are now open for consultation, would give consumers until December 12 to get their solar systems installed and accredited to qualify for the previous FIT. After that date, installations will receive the higher rate until April 1, before moving onto the lower tariff.

Meanwhile, the German network operator Bundesnetzagentur has announced that the high level of solar installations over the last year, which reached around 5200 MW, will trigger an automatic cut in the FIT of 15%.

The German government’s FIT scheme was set up under a digression regime so that tariff levels are determined depending on the level of installations the previous year. But while the level of installations was over the 4500 MW level that triggers a cut, it was well down of the previous year’s total of 7800 MW.

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Related stories:
Good Energy urges UK consumers to start generating their own energy (26-Oct)
UK Government moves to close solar feed-in tariff loophole (28-Jul)
UK Government confirms deep cuts to large-scale solar feed-in tariffs (9-Jun)

31 October 2011