Government proposals to speed up the reduction in feed-in-tariffs (FITs) for solar power could spell “armageddon” for the growing Midlands industry, according to a renewable energy company.
The Department for Energy and Climate Change (DECC) has announced plans to reform subsidy payments to consumers who install solar panels on their roof.
A tariff of 21p/kWh will take effect from April 1, with properties installing panels after April 1 required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for a full FIT.
In line with the evidence of falling costs for solar PV, the DECC is proposing to tie subsidy levels to cost reductions and industry growth to provide more certainty for future investments, it said.
Eco Environments, which has an office in Birmingham, says the FIT rate for domestic photovoltaic (PV) schemes could plummet as low as 13.6p from July 1.
David Hunt, a director with Eco Environments, said: “A reduction to a tariff as low as 13.6p in just a few months’ time is the equivalent of Armageddon for the solar industry.
“There is simply no way that product and installation costs will drop that much in such a short period of time to make such a low tariff rate economically viable.
“Together with a dramatic slashing of FIT rates in July, Ministers are also proposing ongoing six-month reviews, a reduction from 25 to 20 years for the FIT rates being applicable for solar PV and the removal of RPI-linked payments.
“These cuts and proposals fly in the face of Greg Barkers declared ambition to encourage the installation of 22GW of solar before 2020, with the changes recommended there will be no one willing to buy and no one left to install it.
“Yet again the Government, even with a newly appointed Energy Secretary in Ed Davey, seem happy to watch the solar industry lurch from one crisis to the next.
“It is crucial that Ministers listen properly to the industry this time and ensure that the consultation process on future tariffs is a robust process rather than last time’s sham.”
The Government cannot give certainty on tariff levels to people who install solar panels with an eligibility date between December 12 2011 and March 3 2012 due to ongoing legal proceedings.
It has refused to drop its Supreme Court challenge to a High Court ruling – following a legal challenge by Friends of the Earth and two solar firms – which said plans to introduce lower subsidy payments in December 2011, before the official consultation into the move had closed, was illegal.
DECC is appealing to the Supreme Court and has until February 21 to lodge its case.
The surge of solar PV installations in the latter part of last year, due to a 45 per cent reduction in estimated installation costs since 2009, has placed a huge strain on the FITs budget, the Government said.
Climate Change Minister Greg Barker said: “Our new plans will see almost two and a half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.
“We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.
“I want to see a bright and vibrant future for small scale renewables in the UK and allow each of the technologies to reach their potential where they can get to a point where they can stand on their own two feet without the need for subsidy sooner rather than later.”