DECC attempting to artificially limit the solar market…or scrap the scheme entirely

Not content with completely decimating the available feed-in tariff rates for solar, the Department of Energy and Climate Change’s (DECC) potentially catastrophic consultation on the future of the feed-in tariff (FiT) also introduces the possibility of a cap on all new FiT expenditure.

The idea of the cap is to ensure that spending under the Levy Control Framework remains manageable for the department. The government wants a total cap on new FiT expenditure of £75-100 million by 2018/19.

Ominously, the consultation warns that “if cost control measures are not implemented or effective…the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible”, which would equate to 1 January 2016.

If the Conservatives do end up scrapping the feed-in tariff scheme, they would keep the export tariff open as the only route to market for eligible generators.

DECC is also proposing to enforce default degression each quarter, which would see FiT support for some scales of solar end as early as 1 January 2019. DECC will still implement a contingent degression mechanism that could degress tariff rates by  a further 10% depending on deployment.

The table below outlines DECC’s plans for default degression for all solar PV tariffs:

And here’s how it translates into capacity installed and number of installations:

Maximum solar PV deployment per quarter in MW

The consultation document misleadingly groups the 50-250kW, 250kW-1MW and the >1MW bands together. However, given government’s imposed budget constraints, DECC is saying that it can only support 568.8MW of new solar PV capacity under the feed-in tariff over the next three years.

568.8MW in three years…190MW a year

To say that this represents a contraction is somewhat of an understatement. Below are DECC’s estimates for how this would translate into number of installs:

At the time of writing, there are 2,685 MCS-registered installers of solar PV in the UK. Government’s proposals mean that the best possible scenario will see 2,685 installers fight it out for a maximum of 1,576 solar PV installs a month.

The latest feed-in tariff figures show that the UK solar industry installed 10,644 arrays in July 2015. Moving to an average of 1,576 installs per month will equate to an 85% drop in business for the solar sector.

It doesn’t take a genius to see that these numbers do not add up and that there will be inevitable heavy redundancies if the government ploughs ahead with this review.

Unfortunately, we’ve already heard from a number of companies who are planning redundancies if the government ploughs on with these proposals as laid out in the consultation. Solar Power Portal will be undertaking further analysis of the proposals in the upcoming edition of Solar Business Focus UK, which will be available at Solar Energy UK 2015.