Updated: May feed-in tariff rates remain largely the same despite controversial degressions

  • Installer

    Domestic FiT rates will remain unchanged come 1 May, however, the 50kW-5MW market has experienced a controversial automatic 3.5% degression. Image credit: Sundog

Ofgem has confirmed the feed-in tariff (FiT) rates for solar photovoltaic technology for the period starting 1 May 2013 until 1 July 2013*.

The new FiT rates for installations with an eligibility date on or after 1 May 2013 are as follows:

Description

FiT rate p/kWh

0-4kW

15.44

>4-10kW

13.99

>10-50kW

13.03

>50-100kW

11.10

>100-150kW

11.10

>150-250kW

10.62

>250kW-5MW

6.85

Stand-alone

6.85

Export tariff

4.64

The rates remain largely the same, following a continuation of disappointing installation levels across all capacity bands. However, the 50kW-5MW bands have seen a degression of 3.5% across the board.

The larger bands have fallen victim of the controversial automatic degression model that the Department of Energy and Climate Change (DECC) included as part of the revised feed-in tariff. Even though installations in all of the newly-degressed capacity bands has been well below the level that would trigger an automatic degression for the last nine months, the rates have been cut by 3.5% automatically – this is because DECC stipulated that if there was no degression for nine months then the tariff would automatically degress by 3.5%, regardless of installation levels. DECC believes that the automatic degression will help control the boom and bust sequences that had previously plagued the industry.   

The solar industry has been heavily critical of the FiT rates set for larger-scale solar under the FiT. The initial FiT rate of 7.1p for the >250kW-5MW band has led to almost no investments being made in the capacity band and was dismissed as “incorrect” by the Solar Trade Association’s PV Specialist, Ray Noble.

A major criticism levelled at the tri-monthly degression model when it was introduced was that it failed to introduce any method to readdress the FiT levels if installation rates flat-lined – like the 50kW-5MW market has currently. Indeed, even though there has been extremely low deployment in the tariff bands, the rate has been cut by a further 3.5% regardless of the sector’s performance.

Industry insiders are concerned that DECC is damaging a very important market with the overly-restrictive FiT rate – namely, the large-scale commercial rooftop market. A FiT rate of 6.85p for 250kW-5MW projects will see almost all new projects installed within that band elect to receive support under the Renewable Obligation (RO). During the recent RO banding announcement, DECC announced that it was introducing a higher RO rate for roof-mounted solar (1.7ROCs) to help stimulate demand in the sector.

The Solar Trade Association (STA) believes that DECC is suppressing the non-domestic roof-mounted solar market by setting an uneconomic FiT rate for >50kW bands last August. The STA have also expressed fears that the expansion of non-domestic solar is being constrained by “overly tight capacity allowances”.

As a result, the STA has written to the Energy and Climate Change Minister, Greg Barker, to ask him to personally intervene and breath life back into the large-scale roof sector.

STA Head of External Affairs Leonie Greene said: “Larger solar roofs are very cost effective and have a major role to play transforming choice for businesses, communities and public sector actors in the electricity sector. If we are serious about Electricity Market Reform and value for money in the UK, then the tremendous potential of big solar roofs needs to be unlocked.”

STA CEO Paul Barwell added: “It makes little sense to be looking at increasing the maximum size for FIT-eligible solar projects when it is clear that it is the existing large-scale roof sector that urgently requires attention. While DECC have sought to recognise the large-roof sub sector under the RO, the FIT is the best mechanism for actors in the commercial, public and community sectors, who need a user-friendly support scheme. We're in danger of developing an illogical and messy policy framework if we don't deal with the obvious failures under the existing scheme.

“I urge Ofgem and DECC not to degress these FIT bands in May. We will be writing to Ministers again to explain the importance of these sub-sectors. Furthermore non-domestic solar should not be subject to tight capacity constraints given how cost effective it is now. Constraining its growth, while supporting more expensive technologies, is unfair.”

* Update:  A DECC spokesperson has confirmed that the latest FiT period will run from 1 May, 2013 to 1 July, 2013 instead of the anticipated 1 August, 2013. DECC told Solar Power Portal that this is an administrative change, to bring degression quarters in line with FiTS scheme quarters.  There will be a return to three monthly periods again from 1 July.

What are your thoughts on the degression model and the FiT rates as of May 2013? Let us know in the comments below.

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