The Department of Energy and Climate Change (DECC) has published its response to the controversial ‘Phase 1 consultation on Solar Photovoltaic Feed-in Tariffs’.
DECC has announced that photovoltaic systems installed on or after April 1st 2012 will be required to produce an Energy Performance Certificate rating of D or above to qualify for the full FiT level. DECC lowered the proposed level from C to D as a result of industry concerns raised from almost 3,000 responses to the consultation. DECC viewed the previous proposals for an EPC rating of C or linking it to all financeable measures under the Green Deal, as ‘impractical at this stage’. DECC estimates that about half of all properties are already eligible for a ‘D’ rating.
Multi-installation tariffs will remain at 80% of the standard tariff, to reflect the lower costs that such installations benefit from. As a response to feedback, DECC has changed the threshold for the lower tariff from more than one, to more than 25 installations operated by an individual or organisation. However, DECC is consulting on a proposal that would allow social housing, community projects and distributed energy schemes to be exempt from the reduced multi-installation tariff rates.
Following the publication of a report analysing the falling costs of solar PV, DECC has proposed a much-touted cost control mechanism. DECC will remove the need for emergency reviews by ‘pegging the subsidy levels to cost reductions and industry growth to provide more certainty for future investments. This will ensure that subsidy levels keep in step with the market’. DECC will use budget flexibility to cover the overspend following the December surge in installations, while still allowing £460 million for new installations over the Spending Review period. DECC believes that this won’t have any impact on consumer bills beyond the agreed overall cap on renewable subsidies as it will primarily be funded from an underspend on the budget allocated for large-scale renewables.
DECC’s proposed mechanism for changing tariffs after July will include an automatic baseline transgression of 10% every 6 months, which can be triggered early if deployment exceeds pre-determined levels. The system will be reviewed annually to ensure that it is performing well against its objectives.
DECC is also proposing that solar FiT tariff levels should reduce from July 1st, 2012. The rates for July will be 13.6p or 16.5p depending on the volume of deployment of PV in March and April 2012. FiT rates will be further reduced in October by 5%, and every six months thereafter. The Department is also consulting on whether the export tariff can be raised and whether or not the lifetime of the FiT scheme should be reduced from 25 years to 20.
