The FiT story so far (complete with happy ending)

At last – I finally have something positive to blog about. Yesterday morning we uncovered the news that Government was set to lock in the future of the UK solar industry by publishing what feed-in tariff rates will look like until at least April 1, 2012. Offering some much-needed, long-awaited, certainty to our extremely frustrated industry, the announcement has brought a welcome alternative to the frequent disruption experienced in recent months.

As pretty much all of you reading this will be painfully aware, the Department of Energy and Climate Change (DECC) announced on October 31 its intention to cut solar feed-in tariff rates by up to 50 percent from April 1, with a cut-off date of December 12, 2011. This reference date was quickly criticised (not least because it was two weeks before the end of the consultation) and consequently held up in the High Court.

After a judge ruled the 12/12 reference date was “unlawful” Government refused to back down and launched an appeal. This appeal was not immediately granted, and as a result, a large amount of uncertainty flooded into the market. No one knew what the future held…until yesterday.

Certainty at 21p

For those of you who are unclear on what yesterday’s announcement actually means, let me clarify:

If DECC wins its appeal the feed-in tariffs will remain as they are set out in the consultation document published on October 31. That means systems up to 4kW will receive 21p from December 12.

If DECC loses its appeal, the 43p rates will be reinstated until March 3, when they will be cut to the lower rates.

In both cases the tariffs are guaranteed until March 31.

The new generation tariffs set out in the draft licence modifications being laid today are set out in the table below:

Band (kW Declared Net Capacity (DNC)

Current generation tariff (p/kWh) 

New generation tariff from 1 April 2012 (p/kWh)

≤4kW (new build)

37.8

21.0

≤4kW (retrofit) 

43.3

21.0

>4-10kW

37.8

16.8

>10-50kW

32.9

15.2

>50-100kW

19

12.9

>100-150kW 

19

12.9

>150-250kW

15

12.9

>250kW-5MW

8.5

8.5

stand alone

8.5

8.5


This, I think you’ll agree, is fantastic news. For the first time in months we actually know what to expect in the months ahead, providing a far more stable environment for solar companies to work within.

Commenting on the news, Friends of the Earth’s Executive Director, Andy Atkins said: “At last the Government is taking steps to sort out some of the uncertainty that's crippling a thriving UK industry – planned cuts will allow solar firms to start planning for the future.”

Cathy Debenham, Founder of YouGen said: “This brings a bit of welcome certainty to both consumers and installers in the solar PV market, which can only be a good thing. It’s a pity that the Government didn’t act quicker and lay this amendment as swiftly as it appealed to the High Court.

“For consumers that are happy with the rate of return that 21p per kWh gives; now is a good time to install. It's unlikely to get better, and it's quite likely that the rate may go down again after March 31 2012. There’s the added bonus that they may win the jackpot and get the 43p rate (if the government loses its appeal), but shouldn’t rely on it when making their decision.”

The Renewable Energy Association’s Chief Executive, Gaynor Hartnell said, “The laying of the order is helpful. Regardless of the outcome of the appeal, we now know that installations made after March 3 will definitely qualify for the new tariff rates.This removes some of the short-term uncertainty and it is a welcome move.”

Solar scramble

As soon as yesterday’s good news begun to filter into the market, solar companies set about preparing themselves for what is expected to be one of the biggest gold rushes in the UK solar market’s history. With certainty at 21p, an inundation of installation orders are anticipated until March 31, bringing back memories of the weeks leading up to December 12.

What about after March 31?

Yet, although another gold rush is predictable in the coming weeks, the publication of DECC’s Phase 2 consultation document (which is due to be published by Jan 31) is expected to provide a more stable outlook.

With plans to introduce a German-style degression model for FiT cuts over the next four years, it is hoped the Phase 2 proposals will map out exactly what to expect from March 31 until the end of the current spending envelope. Subsequently, solar businesses working in the UK market will be able to form their strategies in advance, as opposed to suffering the six-week notice periods they have been forced to work with in the past.

The future’s bright

Looking back over the last few days in comparison to recent months, it’s hard to believe we actually got to where we are today. At last it seems Government has started to listen to industry, and more importantly work with it. Of course, DECC ministers have been touting their support for solar for months now, but this is really the first concrete evidence we’ve seen to support the future of our solar industry.

Speaking about the decision to map out a ‘Plan B’ in case of defeat at the Court of Appeal, DECC was keen to reiterate that although it was aware of Friends of the Earth’s calls to do this, the real motivation behind the move was to “provide a contingency so that we can manage the budget and provide certainty to installers and consumers all over the country.”

Referring directly to the industry’s frustration surrounding Government’s handling of the feed-in tariff scheme, the Minister commented,

“We’re taking this back up step to provide certainty in the event we lose the appeal – I want to ensure the FiTs scheme can continue.

“There are two possible outcomes, either we win the appeal and all the consultation proposals are back on the table, or we lose and this action means that everyone knows what the tariff will be if that happens – we are providing certainty.”

While I’m sure many of you out there are reading this thinking, “I’ll believe it when I see it,” you can’t deny that this is the best things have looked in a long while. For once we have security not only in the coming weeks, but also (when the Phase 2 document is published) for the next few years.

What do you think about this news? Are you now planning your business strategy for 2012? Join Solar Power Portal at the Solar Power UK 2012 Roadshow series: Coping with the Cuts – coming to a town near you.