Photovoltaics

6. June 2012

The British government plans to make a further reduction to PV feed-in tariffs from August 2012 onward. The tariff for smaller rooftop installations will be reduced from ₤0.21/kWh to ₤0.16/kWh*. The public enquiry carried out between February and April has highlighted the need for a further reduction for new PV installations in the second half of the year, says an answer from the government to the latest tariff review (phase 2A). This is said to be a reaction to the obvious fact that the costs for production and installation of PV equipment have fallen more quickly than had been anticipated in October 2011 – when it had been decided to halve the tariffs for solar electricity before the end of the year as a result of an initial review. In fact this was only put into practice in April of this year.

According to the Department of Energy & Climate Change (DECC), the future scheme will no longer reduce the tariffs on a strict percentage basis as in the past. They will be adapted flexibly. The reductions will be made quarterly and will add up to a half-yearly degression of 3.5%. There will also be the possibility to leave out up to two reductions in a row if the support is only being taken up at a low rate. Conversely, if the uptake is intensive, the degression can be increased to up to 28%. There will be an annual review of all the supplementary measures.

The Solar Trade Association (STA) welcomed many aspects of DECC's new FIT cost control framework for solar PV. “This now provides the industry with the security of guaranteed tariffs to 2015 allowing it to build for the future. The STA is pleased to have won its ask for quarterly reviews with more responsiveness to market size, and less emphasis on automatic tariff cuts,” Chief Executive Paul Barwell commented.
According to STA, the government has provided the resources to achieve around 800MW to 1,000MW of solar installations each year to 2015.

At the same time STA disagrees with DECC's methodology for the calculation of long-term returns on investment. While recognising the need for budgetary control, the association views the operation of a FIT scheme within an inflexible cap remaining highly problematic and having a poor record internationally. "As well as creating difficulties for the industry, it puts unfair pressure on civil servants and ministers."

The tariff reductions will take place in three categories: house rooftop installations (higher tariff), small commercial plants (middle tariff) and large commercial plants (low tariff).

Planned PV feed-in tariffs from August 2012 in pence/kWh
Class	Higher tariff	Middle tariff	Low tariff
≤ 4 kW	16.00	14.40	7.10
> 4 kW ≤ 10 kW	14.50	13.05	7.10
> 10 kW ≤ 50 kW	13.50	12.15	7.10
> 50 kW ≤ 150 kW	11.50	10.35	7.10
> 150 kW ≤ 250 kW	11.00	9.90	7.10
> 250 kW ≤ 5000 kW	7.10	7.10	7.10
Stand-alone	7.10	7.10	7.10