Feed-in tariffs “the money’s all but spent”

The bubble created by the Department of Energy and Climate Change’s (DECC) artificial December 12 deadline led the UK’s solar capacity to top half a Gigawatt. The record level of new solar installations means that the budget for the next four years is almost fully committed.

Analysis by Feed-in Tariff Ltd shows that systems already installed will absorb 90 percent of the available four-year funding. Current UK solar PV capacity accounts for a commitment of £773 million in tariff payments through to April 2015, against the Government’s ‘spending envelope’ of £867 million.

“The government has been its own worst enemy” says company director Philip Wolfe. “By repeated tinkering with the feed-in tariffs it has created a series of stampedes in the run-up to deadlines in August, October and now December and these have simply brought forward the expenditure.”

Wolfe continued: “The consultation that closes this week is designed to throttle back the rate of new solar installations to a trickle. Paradoxically the success of the scheme, which on Monday passed the landmark of 500MW registered since April 2010, will catapult the UK into the top 10 markets for solar photovoltaics in 2011. However, if government manages to stifle this success, we will sink promptly back to the bottom of the league table.”

In order to stay within Governmental spending predictions for the feed-in tariff scheme, DECC will also need to dampen the take up other renewable technologies under the scheme.

To stay within the spending cap, deployment would have to fall by 95 percent from the current trends, even at the reduced tariff levels now proposed. “These swingeing cuts have put thousands of people on the dole this Christmas, with many more to follow in the New Year”, reiterated Wolfe. “Surely the government can see that the cost to the UK economy outweighs the costs it is trying to save.”

Wolfe also defended the cost of feed-in tariff support for the consumer, stating: “It’s also a fallacy that holding spending down to this paltry level is good for consumers. In this period, the feed-in tariff scheme will add only 0.7 percent to bills, compared to recent power price rises of 14 percent. Renewable energy costs don’t rise over time. By throttling it back so hard, the government is exposing us all to the price volatility that goes with ever more imported fossil fuel.”

Wolfe’s comments follow the High Court ruling that the Government’s handling of FiT cuts were “legally flawed”. A decision that means that pre-December 12 tariff rates cannot be changed until a full eight-week consultation and 40-day period have been observed. Effectively reinstating the previous 43p rate until April, unless the Government appeals the High Court’s decision and win, in which case tariff rates would drop to the rates concluded after the consultation closes.