Yesterday, the Department of Energy and Climate Change (DECC) lifted the lid on its long-awaited consultation over solar feed-in tariffs. The Minister for Energy and Climate Change, Greg Barker set out proposals that, he said, provide “a strong, sustainable foundation for growth for the solar industry.” The new proposals include a 16p generation tariff, 4.5p export tariff, 3-monthly degressions and a shortening of the FiT scheme lifetime to 20 years.

DECC also published an Impact Assessment to complement the new proposals, providing more details on how the department believes the changes will affect the UK solar market.

In February’s previous consultation document the department estimated that, under a central cost-reduction scenario, the UK would install 22GW by 2020. The 22GW by 2020 figure was leaped on by Greg Barker to demonstrate the scale of ambition his department held for solar, in an attempt to stem the tide of ill-feeling towards DECC from solar installers in the wake of a 50 percent cut to the solar FiT rate.   

However, the department’s latest IA indicates that, under a ‘central cost reduction scenario’, the most moderate option, just 11.9GW of capacity will be installed by 2020.

The department explains that the 10.1GW shortfall is because “Parsons Brinckerhoff’s (PB) estimate for the cost of large-scale PV installations is significantly higher than in their February report, and PB projects much slower reductions in installation costs from 2014 onwards than previously estimated. Furthermore, it is assumed that investor hurdle rates are higher than before, leading to less uptake at a given tariff.”

The news that PB’s report offered drastically wrong figures will not come as a surprise to the majority of the industry, who pointed out in February that the report was put together in just four days and largely based on data gathered during the summer of 2011.

A spokesperson for DECC told Solar Power Portal that the IA also projects 21GW of capacity under a potential ‘high’ level of deployment.

The spokesperson explained: “As already set out, Government sees a bright future for solar here in the UK and expects to reflect the growing role of solar power in the UK’s energy mix in its updated Renewable Energy Roadmap later this year. 

“However, uptake by 2020 will depend on when solar PV becomes viable with little or no subsidy and 22GW by 2020 is an achievable ambition if industry can get its cost down quickly.  That is why Government has also launched a solar PV cost reduction taskforce in partnership with industry to help drive down costs down faster while maintaining safety and standards.”

Industry reaction to DECC’s new proposals has been largely positive, with many welcoming the long-term certainty that the new mechanism provides. However, the revelation that over 10GW of capacity has vanished under DECC’s ‘central-cost reduction’ modelling will trouble industry.