Drastic UK FIT Scheme Change For Solar PV

Following weeks of speculation the Department of Energy and Climate Change (DECC) confirmed the changes they are putting forward to revamp the FIT scheme. Currently the changes are only proposed changes, a consultation is set for the 23rd December 2011 where it is thought they are likely to be given the go ahead.

The cuts have been proposed because the industry has grown at such a rapid rate the funding needs to be reassessed, the cuts will see the tariff payments fall by over 50%. The rumors had all speculated that the changes would be immediate, these rumors were not strictly true though - any installations after the 12th December (before the consultation!) will receive the current rate until the 31st March 2012 and then move on to the lower rate after that.

Greg Barker, who is the Climate Change and Energy Minister made the following statement "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 means we've got no option but to act so that we stay within budget and not threaten the whole viability of the FITs scheme.“ Barker then went on to say, “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."

The DECC made it extremely clear that these changes will only effect new installations, anyone that is currently receiving the FIT payments will continue to do so at their current rate for the 25 years as it had been agreed. The new rate for systems up to 4kW in size is 21p per kWh, the current rate is 43.3p per kWh so more than a 50% drop in payments.

The price for purchasing solar products at a manufacturer level has been steadily decreasing throughout 2011, so it is thought most companies will combat the change in the scheme by dropping the initial price to purchase and install PV solar panels. The reaction throughout the industry has been mixed, with some companies looking at it positively with a plan to drop prices and help homeowners still see the benefit in solar. On the other side of the fence are the companies that believe it will be really damaging to their business.

A final decision will be made on the 23rd December as to whether the changes will come into affect. Whatever happens solar will continue to play a large part in the UK’s energy industry as it is so important to help reduce CO2 emissions and to slow down the rate of climate change.