Urgent action is needed to put the solar industry on a steadier growth path, to “avoid boom and bust” and protect the wider Feed-in Tariff scheme (FITs), the Climate Change and Energy Minister Greg Barker has said.
Reduced subsidies for domestic solar electricity production have been proposed as part of an effort to keep the FITs scheme budget under control and reflect the plummeting costs of the technology.
As The Green Car Website reported last week, new proposals would introduce a reduced tariff for schemes up to 4kW in size of 21p/kWh – down from 43.3p/kWh – halving what people currently receive for having solar panels on their homes or businesses. Reduced rates are also proposed for schemes between 4kW and 250kW.
Barker said: “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.
“The plummeting costs of solar mean we’ve got no option but to act so that 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 who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.
“Our proposal for an energy efficiency requirement, as well as the launch of the Green Deal next autumn, creates a massive opportunity for these firms to use their expertise to get a foothold in this exciting new market.
“People who are now thinking of installing solar PV need to do so with their eyes wide open and I’d encourage them to call the Energy Saving Trust for the latest advice.”
The cost of an average domestic PV installation has fallen by at least 30% since the start of the scheme – from around £13,000 in April 2010 to £9,000 now.
If the Government took no action, by 2014-15 FITs for solar PV would be costing consumers £980m a year, adding around £26 (2010 prices) to annual domestic electricity bills in 2020. The Department for Energy and Climate Change’s proposals would restrict FITs PV costs to between £250-280m in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 (2010 prices) in 2020.
The new proposed tariffs would apply to all new solar PV installations from December 12, 2011. Such installations would receive the current tariff before moving to the lower tariffs on April 1, 2012. Consumers who already receive FITs will see their existing payments unchanged, and those with an eligibility date on or before December 12 will receive the current rates for 25 years.
