Updated: Legal loophole gives large-scale solar new hope

The policy loophole exposed by the Solar Power Portal last week will in fact remain open for two months after the effects of the fast-track feed-in tariff review go through. In a shocking turn of events, the Department of Energy and Climate Change (DECC) has today revealed that it will consult on the apparent escape clause until August 31, with any changes going through from late September.

Under sections 15 and 16 of the ‘Feed-in Tariffs (Specified Maximum Capacity and Functions) Order 2010’ document, developers are currently able to install a system over the microgeneration amount (50kW) before the August 1 deadline – thereby receiving the higher FiT rate – and then install an extended capacity within 12 months. Importantly, this extended amount would also benefit from the higher rate.

This loophole has been kept under wraps since its discovery, in order to prevent an anticipated rush of installations. Some companies are thought to have already taken advantage of this clause, by installing what they can in the timeframe left in the wake of the fast-track review, and then planning the remaining capacity post August 1.

Since publicity began to surround this loophole, DECC has been working hard to close it, as this presents the same problem the Department was trying to quash in the first place.

A DECC spokesperson said, “We have become increasingly aware that a number of large-scale solar PV developers are positioning themselves to exploit a loophole in the FiTs extensions rules in order to bank the current tariffs beyond 1 August. We are concerned about this development and are considering taking action quickly.”

However, the Department has today opened the ‘Consultation on a technical change to the rules on the treatment of extensions to installations under the GB Feed-in Tariffs scheme,’ which provides an opportunity for industry to shout out its views on the proposed treatment for extensions.

“Following the outcome of the fast-track review on FiTs, which was published on June 9 2011, we have become increasingly aware that some large-scale PV developers are intending to exploit a technical loophole in the FiT legislation on extensions to benefit from pre-fast track tariffs post August 1 2011,” outlined the consultation document.

DECC will gather responses until August 31 and subject to the responses received – and Parliamentary process as set out in the Energy Act 2008 – aim to make changes to the ‘Feed-in Tariffs (Specified maximum Capacity and Functions) Order 2010.’

“Our intention is to make these changes in September 2011 and for changes to be effective 31 October 2011,” said the DECC.

However, since publication of Solar Power Portal's article, DECC has confessed that it made a mistake and has taken down the October 31 date, claiming that changes are actually more likely to go ahead by the end of September.

Speaking with Solar Power Portal a DECC spokesperson indicated that this extension could mean large-scale developers taking advantage of the loophole have until as late as September to install systems up to 5MW, therefore benefitting from the higher feed-in tariff rate.

“The process from 31 August will involve analysis of consultation responses and, subject to the outcome of that analysis, the usual parliamentary processes and conventions for statutory instruments.  These include the convention that for an instrument which is subject to the negative procedure, a period of at least 21 days is normally allowed between the laying and coming into force of the instrument.

Organisation’s have to comply with the legislation as currently drafted, so yes the current legislation still applies until the point any amendment on extensions come into force.”

DECC also confirmed that the FIT Order is different from the modifications to the standard conditions of electricity supply licences which give effect to the new tariffs following the fast-track review. 

"A specific process is set out in the Energy Act 2008 requiring a draft of the proposed modifications to be laid before Parliament for 40 days. Assuming no resolution has been made within either House of Parliament during that period to the effect that the draft is not approved, the Secretary of State may then make the modifications in the form of the draft," the spokesperson outlined.

This is a ground-breaking moment for the UK solar industry, as those who would potentially lose thousands due to the effects of the fast-track review could now recoup costs by ploughing ahead in the extra time provided by this consultation.

An anticipated 10-20 more large-scale systems could be completed in this timeframe.

Those interested in providing a response to the consultation can do so here.

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