Solar Feed-in-Tariffs cut drastically in Government review

The Government has, on the 31st October 2011, confirmed that they are proposing to reduce domestic solar installation incentives by more than 50 per cent, cutting the feed-in tariffs available to domestic and small-scale business installations, from 43p per kWh to just 21p per kWh.

Despite an evident wish to push these changes through, the Department of Energy and Climate Change has launched a consultation period on the proposed changes. They state they wish the changes to begin on 12th December, but have received strong criticism for ending the consultation on 23rd December, over a week after the changes would have gone ahead anyway.

Under the proposals, the new tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011.

Such installations would then receive the current tariff before moving to the lower tariffs on 1 April 2012, assuming the government does not make further changes following the closure of the consultation on 23 December.

It has been reported that many industry experts have been quick to criticise the reforms. They claim that such a sharp contraction in payments will lead to a loss of demand and could spell the end for free solar financing schemes and social housing projects. Furthermore, predictions are of significant job losses if the changes come into effect and leading solar firms are expected to mount a high-profile campaign against the scale of the cuts.

Regardless, climate minister Greg Barker has insisted that the sharp cuts are essential to ensure the feed-in tariff scheme remains viable within its spending cap and provides more “sustainable” foundations for the UK’s solar industry.

“My priority is to put the solar industry on a firm footing so it can remain a successful and prosperous part of the green economy, and so it doesn’t fall victim to boom and bust,” he said in a statement.

“The plummeting costs of solar mean we’ve got no option but to act so we stay within budget and not threaten the whole viability of the FITs scheme.

“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 to many in the solar industry that have themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

Yet more problems for domestic energy users have been raised by the RICS recently concerning roof space letting. To read more, click here .

01/11/11

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