Meeting with the Department of Energy and Climate Change (DECC) this morning solar industry members were told that there is a “high level of certainty” that the proposed feed-in tariff rates of 21p and below will remain unchanged until April 2012. This news casts aside fears that Government will further reduce the already slashed feed-in tariff rates for solar before April 2012.
On October 31 this year DECC revealed plans to reduce the feed-in tariff incentive rates for solar installations below 250kW. At the residential level, these cuts would go as deep as 50 percent, chopping the rates down from 43.3p per kilowatt hour down to just 21p. These new rates were said to take effect from April 2012, with a cut-off deadline of December 12 (today) for installations which were to receive the higher rates – despite the fact that the consultation would not end until December 23.
Outrage begun to spread through the UK solar industry as the legality of imposing an installation deadline weeks before the consultation on the policy ended, prompting yet more uncertainty in the already concerned industry.
While there was a great amount of backlash in response to the proposed feed-in tariff cuts, many found that the new rates were acceptable, especially with the falling cost of solar photovoltaic technology. However, those rushing to install systems before the cut-off point begun to worry that the incentive rates could again be reduced, with the principle ‘nothing is certain’ saturating the market.
However, we can reveal today that the Department has sought legal advice on how it can now proceed. According to our source, the Government hopes to respond to the consultation in January 2012 and will need to do so by February 8, 2012 at the latest, if rates are to be changed from April 1, 2012 as proposed. Government is aware that the industry needs certainty as soon as possible and says that it “will strive to announce a decision quickly.”
Government would “almost certainly” not be able to set a tariff below 21p (or the other tariffs proposed in the FiTs Phase 1 consultation) without a further consultation. If this were the case, changes could not be implemented on or before April 1, 2012, as there is simply not enough time to launch a new consultation between now and then.
This news provides at least four months of assurance for an industry which has to date experienced nothing but uncertainty. The ongoing level of tariffs for solar PV, together with proposals for a cost control mechanism for feed-in tariffs, will be part of the feed-in tariff Phase II consultation, which will be published some time in January 2012.