FiTs consultation response: phase 1: what to expect from DECC

Tomorrow DECC will publish its long-anticipated response to the consultation on its controversial cuts to the solar feed-in tariff rate.

The document will effectively map out the future route of the solar industry; confirming future tariff rates, providing clarification on how DECC propose to link energy efficiency to the FiT and introduce proposals to establish a cost control mechanism.

So what exactly can the industry expect to see tomorrow?

Multi-installation tariff rates

During the consultation period, DECC asked the industry to respond to proposals to dramatically reduce FiT payments for owners of more than one solar installation to 80 percent of the standard tariff. This proposal hit many community solar schemes extremely hard, especially at local council level, where a string of solar project cancellations were announced.

Many community solar schemes complained about the heavy-handed approach of the proposals, which the Local Government Association (LGA) warned would leave thousands of fuel-poor families living in social housing facing steeper electricity bills as a result.

In response Greg Barker said: “I am considering whether more could be done to support genuine community projects in the FiT scheme.”

Tomorrow’s response may well include a separate, higher FiT rate for aggregated systems installed by community schemes as opposed to the lower FiT rate afforded to rent-a-roof schemes.

Energy efficiency measures

DECC will announce its intention to make energy efficiency measures part of the requirement when installing a photovoltaic system in the UK.

The Department has continually reiterated claims that it “wants to ensure that solar PV is considered as part of a holistic approach to carbon reductions in buildings that prioritises energy efficiency,”

The consultation document outlines the two proposals for linking energy efficiency to the FiT. Either, homes will only be eligible for the full FiT rate once they have reached an EPC rating of level C or above, or, homes must install all measures identified as financeable under the Green Deal before receiving the higher FiT rate.

Since the announcement of the Department’s intention to combine solar FiT payments with energy efficiency measurements the industry has been extremely concerned. During a joint committee enquiry into the proposals, the committees warned of the “fatal impact” of enforcing an energy efficiency requirement option on the industry, stating: “We assume that part of DECC's reason for proposing such high [energy efficiency] requirements is to dampen down FiT activity deliberately.”

According to a poll we ran on the Solar Power Portal, which received responses from 198 readers, more than 65 percent believe that this is just another way for Government to prevent the uptake of solar in the UK.

Clearly, the linking of efficiency measures to the FiT rate is a thorny issue that the majority of the solar industry is rightly concerned about. DECC’s report tomorrow will finally outline how the department intends to implement this controversial measure.

Proposals to introduce a cost control mechanism

Back in November 2011, the Minister announced plans to follow the German tariff degression model as part of the second consultation on reforms to the FiT scheme. DECC now intends to announce the outcome of this consultation tomorrow, in time for any resulting legislative changes to come into effect from April 1, 2012.

The announcement should map out what to expect from March 31 until the end of the current spending envelope, in 2015. The cost control mechanism will work by re-evaluating the FiT rate after a set period (e.g. every six months), carefully monitoring market conditions and adjusting rates accordingly.

During a PRASEG solar event at the House of Commons today, Greg Barker said that new model of feed-in tariff will be announced and that DECC are aiming for 22GW of installed solar capacity by 2020.

Judgement day

After what seems an eternity of uncertainty following the rushed fast-track review and subsequent legal challenges, the solar industry is finally set to learn what lies ahead. The noises coming out of DECC appear to be positive, with Greg Barker today declaring that “DECC are now taking solar seriously.”

DECC has also organised an industry roundtable tomorrow to discuss the Comprehensive Review, as part of its on-going commitment to actively engage with the industry.

All we can do for now is wait for the document to land tomorrow and pray that DECC listened to legitimate industry concerns, providing a sensible path for a sustainable future.