Government unveils more reforms to solar support

The government has announced a range of changes to the Feed-in Tariff support for new solar installations to come into effect from this summer.

The changes were in response to a consultation in February and include reduced rates for all tariff bands from 1 August (see table) and a new system of regular tariff cuts from the autumn, designed to improve transparency and give investors more stability.

The Department of Energy and Climate Change had originally proposed to introduce the lower rates from 1 July, but pushed the date back following opposition from the solar industry and concerns over low uptake this spring.

“The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing provide a strong, sustainable foundation for growth for the solar sector,” energy minister Greg Barker said.

Other changes included a reduction in the term of the FiT scheme for new installations from 25 years to 20 years, compensated for by an increased tariff for exporting electricity to the grid, which will rise from 3.2p/kWh to 4.5p/kWh.

DECC also confirmed tariffs would continue to be index linked in line with the Retail Prices Index.

NFU chief renewable energy adviser Jonathan Scurlock said the changes would reduce some of the recent policy uncertainty and meant solar PV would still be an attractive proposition for farmers.

“Despite successive cuts in Feed-in Tariffs, very competitively-priced medium-sized PV systems (typically 50kW) are on the market this year, offering attractive returns for those farmer and growers using a lot of on-site electricity during the summer, such as intensive livestock producers.

“Even if the domestic solar PV market is depressed, many farmers and other small businesses can continue to profit from index-linked investment in solar power, compared with typical commercial borrowing costs.”

Benjamin Davies of Knight Frank’s renewable energy team said the announcement that the export tariff was rising to 4.5p was especially good news.

“Farm-scale solar PV schemes (10-50kW) should still have an annual yield of 10-15% before tax. I think this is really positive for those farmers who have been holding off because of uncertainty about the future of the Feed-in Tariff.”

Generation tariffs

Band  Existing rate (p/kWh)  New rate from 1 August (p/kWh) 
 4kW (new build) 21.0 16.0
4kW (retrofit) 21.0 16.0
4-10kW 16.8 14.5
10-50kW 15.2 13.5
50-100kW 12.9 11.5
100-150kW 12.9 11.5
150-250kW 12.9 11.0
250kW-5MW 8.9 7.1
Stand-alone 8.9 7.1
 Source: DECC    


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