DECC Reveals New Solar Feed-In Tariff Cuts

on Sep 4, 2012
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In late August, the UK Department of Energy and Climate Change (DECC) released the official quarterly statistics for solar photovoltaic (PV) installations, covering the period 1 May to 31 July. These latest figures indicate that the UK solar industry is continuing to suffer from a serious slump in PV installation rates which can only be compounded by the introduction of fresh FiT cuts in August. Due to capacities being reached in a number of tranches, DECC announced that FiT levels for solar installations will decline again as from November 1.

DECC has identified three capacity bands in which installed capacity is monitored: Domestic Scale (0-10kW), Small Commercial (10-50kW) and Large Commercial (50kW-5MW) installations. The FiT rates reductions for each of these bandings is determined by the respective installation levels. Under the newly-introduced capacity trigger mechanism, the level of installations recorded in May, June and July are used to determine the changes in the FiT rates from November 1.

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!m[](/uploads/story/313/thumbs/pic1_inline.png)The recently-announced statistics for that three-month period reveal that installations within the domestic scale tariff band stood at 163.769MW. As this amount of PV installations is in the 100-200MW bracket, this will trigger a 3.5 per cent tariff reduction from November 1. Accordingly, the new tariffs will be 16 pence per kWh for systems smaller than 4 kW and 14.5 pence per kWh for 4-10 kW systems.

In the small commercial-scale banding, installations were 57.09MW. Although slightly above the 50MW threshold, this will also result in a 3.5 per cent reduction to the existing tariff rate. As of November 1, the tariff rate for solar systems in the 10-50kW bracket will be 13.03 pence per kWh.
Finally, installations in the commercial-scale banding stood at just 13.94MW. As this is below the 50MW degression point, the FiT rates for installations between 50kW and 5MW will remain the same until at least February 1 next year. From November 1, the tariff rates for large commercial installations will remain 11.5 pence per kWh for 50-150kW installations, 11 pence per kWh for 150-250kW installations and 7.1 pence per kWh for 250kW-5MW installations.

The industry had been expecting a noticeable dip in installation rates but the severity of the dip and its prolongation are of concern to solar installers already bracing themselves for another round of FiT cuts due November 1 and the first to be promulgated under the newly-introduced tri-monthly degression model. Critics of the new scheme have pointed to the lacklustre installation figures as evidence that Government is cutting too far, too quickly – severely damaging the fledgling industry.

But seemingly many solar installers believe that DECC has laid the foundation for steady growth in the industry. When the tri-monthly degression model was announced, UK Solar Trade Association chief executive Paul Brawell said: “The [model] now provides the industry with the security of guaranteed tariffs to 2015 allowing it to build for the future.” He added: “It is vital consumers understand tariffs can come down because the costs of solar have come down – there is a faulty perception out there that cuts mean solar doesn’t pay. In fact, solar offers similar returns today as when the FiT scheme began because the industry has been so successful at reducing technology and installation costs.”

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