Final feed-in tariff rates: the reaction

Last month Decc announced its final decision on new rates for the Feed-in Tariff (FiT), cutting the figure for smaller domestic solar PV installations by 63 per cent.

Starting on February 8 installations with a capacity of less than 10 kW will receive 4.39p/kWh, compared to the current rate of around 12p/kWh. In its consultation document DECC initially proposed an 86 per cent reduction to 1.63p/kWh but scaled back the decrease following the response.

The rate for small commercial installations of between 10 and 50kW will be cut from 11.3p/kWh to 4.59p/kWh, again a less drastic change than Decc’s original suggestion of 3.69p/kWh. There will be big reductions to the rates for larger installations as well, although they will be closer to the department’s initial proposals. Its own impact assessment predicts the new rates will lead to job losses in the solar sector of between 9,700 and 18,700. 

Other technologies will also see their rates cut; some significantly, some less so. The one exception is for hydro power projects with a capacity of between 2 and 5MW, which will actually get an increase.

The scheme will undergo a short hiatus before the new rates come into effect, with January 15 set as the deadline for applications to receive the current higher rates. A proposed spending cap of £100 million on the FiT for all technologies between the start of the new regime and April 2019 has been kept in place.

Here’s how the industry has reacted:                      

Paul Barwell, CEO of the Solar Trade Association

“Government has partially listened. It’s not what we needed, but it’s better than the original proposals, and we will continue to push for a better deal for what will inevitably be a more consolidated industry with fewer companies.

“However, in a world that has just committed to strengthened climate action in Paris and which sees solar as the future, the UK Government needs to get behind the British solar industry. Allocating only around 1 per cent of its clean power budget to new solar is too little, particularly when solar is now so cost-effective. Poor ambition for solar risks missing out on not only our renewable energy targets in the UK, but on the world’s greatest economic opportunity too.”

Lisa Nandy, Shadow Secretary of State for Energy and Climate Change

“These short-sighted cuts will place big limits on our solar industry and lead to job losses.

“[They] stand in stark contrast to the generous handouts Ministers recently announced to dirty diesel generators [in the capacity auction].

“At a time when energy bills are a big concern it makes no sense to limit one of the cheapest forms of clean energy.”

Friends of the Earth Renewable Energy Campaigner, Alasdair Cameron

“Less than a week after the UK Government agreed in Paris to keep global temperatures well below two degrees, the government has shown its true colours – and they’re certainly not green.

“These huge, misguided cuts to UK solar are a massive blow for jobs and the economy, and further undermine the government’s already tarnished credibility on tackling climate change.

“Massive public opposition to the government’s original proposal may have forced ministers to modify their plans, but this is still terrible news for the UK and its small-scale renewables industry.”

James Court, head of policy and external affairs, Renewable Energy Association

“The government have taken on board many of the common-sense suggestions from the REA and wider industry, such as bringing back pre-accreditation for long lead schemes, reallocating budgets from under deployed technologies and increasing deployment caps for solar.

“The tariffs are still very challenging and whilst the changes will help save some in the industry it remains that many will be exiting. But this is an improvement, and may still provide the base to get to post-subsidy.”

Maria McCaffery, chief executive, RenewableUK

“The cuts in tariffs for small and medium-scale wind energy projects remain challenging, but they are not as severe as those originally proposed, meaning that a greater level of new capacity can come forward.

“However, we do have concerns about the use of deployment caps and the pace of degression rates, as these may limit the abilities of homeowners, farmers and small businesses to get involved in generating their own power, and secure ongoing cost reduction.”

Dr Nina Skorupska, chief executive officer, Renewable Energy Association

“From where we were after the initial consultation this is a real improvement and praise has to be given to Decc ministers in their willingness to listen and change.

“The past six months have been challenging for our members and the renewables industry, but we now have to draw a line and turn our attention to building a stable, robust and enduring industry leading to a business built without subsidy.”

Caroline Lucas, Green MP

“The Government’s strong words on climate change ahead of the Paris summit are being revealed to be nothing short of bluster and spin. Ministers happily take credit for being climate champions on an international stage while flagrantly undermining the renewable industry here at home.

“Solar is popular and cost effective, and the price is rapidly dropping. To cut support at this stage not only dashes hopes of Britain leading the way in meeting the 1.5 degree target set in Paris last [month], but also risks putting thousands of people out of work.”

Seb Berry, head of public affairs, Solarcentury

“Despite the mantra of protection for ‘hard working families’, the Government has taken the axe to the only UK renewable that has a realistic plan to be off support mechanisms by 2020, with the inevitably negative effect on UK innovation, jobs and investment.

“The increase in generation tariffs for smaller solar PV installations compared to the ridiculous numbers in the original consultation are welcome but the rigid deployment caps mean that this is now a scheme for the few rather than the many.”

Juliet Davenport OBE, chief executive, Good Energy

“The new measures are a slight improvement on the original proposals but still mean that installing solar panels will no longer be attractive to British home-owners and the changes will also make it harder for housing associations and councils to use the FiT to help those in fuel poverty.

“Just last [month], world leaders agreed to ambitious plans to reduce carbon emissions. The UK government really needs to get behind new low carbon technology and take a global lead in seizing the new opportunities.”