Page 1 of 2 Next Last
Page 1 of 2 Next Last

October 31, 2011 , by S. Pascoe

Solar PV Feed In Tariff cut to 21p/kWh

As expected, the Government has announced, subject to consultation, a new tariff for photovoltaic schemes up to 4kW of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW.

In addition, from April 2012, there will be an energy efficiency requirement for any building to achieve an EPC rating of C or better, or to have incorporated all of the Green Deal measures covered by the scheme.

The Government's justification for the reduction is that the cost of having a PV installation has fallen by a massive 30% since the inception of the Feed-in Tariff last year, meaning that returns on investment were significantly higher than originally planned and budgeted for.

“Urgent action is needed to put the solar industry on a steadier, clearer and sustainable growth path, avoid boom and bust and protect the feed-in tariff scheme,” Energy MinisterGreg Barker stated today in the statement. “The plummeting costs of solar means we’ve got no option but to act so we stay within budget and not threaten the whole viability of the scheme.”

The new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2012. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before 12 December will receive the current rates for 25 years.

A recent surge in households installing solar PV has threatened to break the budget. There were over 16,000 new solar PV installations in September alone – nearly double the number installed in June. And nearly three times as much solar PV as projected has so far been installed with over 100,000 separate installations with over 400MW of capacity.

The proposed new tariffs will offer a rate of return of around 4.5% to 5% index linked and tax free (for domestic installations) for well-situated solar PV – broadly comparable to that intended when the scheme was set up. The tariffs are broadly comparable to those offered in Germany, which has also recently reduced its tariffs.

Go to the news main page