November FiT rates receive lukewarm reception

The Department of Energy and Climate Change (DECC) has released the official quarterly statistics for solar installations. Under the newly-introduced capacity trigger mechanism, the level of installations recorded in May, June, July inform the FiT rates for November 1.

The statistics reveal that installations which fall in the 0-10kW tariff band and 10-50kW tariff band will be reduced by 3.5 percent from November 1. The full list of FiT rates starting in November can be found below:

The announcement of further FiT reductions comes amidst the backdrop of disappointing installation figures following the introduction of lower FiT rates less than four weeks ago. Critics of the tri-monthly degression model have pointed to the lacklustre installation figures as evidence that Government is cutting too far, too quickly – severely damaging industry. However, other solar installers attribute the drying up of enquiries to summer holidays and the Olympics.   

A spokesperson for the Department of Energy and Climate Change said: “Today we have announced the installed capacity levels which will be used by Ofgem to determine FiTs PV tariff levels from November 1, 2012. The new payment rates will be published by Ofgem before the end of the month here .”

Rupert Higgin, MD of The Green Electrician commented: “Although the recent FiT cuts have reduced the financial returns, which are still excellent, this is not the main issue for the current lack of demand. Unfortunately Government’s mishandling of the FIT scheme has left people confused by the constant changes and lack of clarity. Government needs to minimise hurdles and help produce a positive supportive framework for the future benefit of the industry and environment at large.”

Tom Pakenham, Chairman of Green Tomato Energy, said: “The stability provided by the degression regime is welcome to a sector that has suffered from considerable uncertainty over the last 18 months. However, Government must continue to monitor the degression formula closely, particularly in light of rapidly changing solar module prices and customer demand. Degression must not be allowed to have an overly negative effect on the market.”

However, many in the industry believe that DECC has laid the foundation for steady growth in the industry. When the degression model was announced Chief Executive of the STA, Paul Barwell said: “The [model] now provides the industry with the security of guaranteed tariffs to 2015 allowing it to build for the future.” He added: “It is vital consumers understand tariffs can come down because the costs of solar have come down – there is a faulty perception out there that cuts mean solar doesn't pay. In fact, solar offers similar returns today as when the FIT scheme began because the industry has been so successful at reducing technology and installation costs.” 

It remains to be seen whether installation rates will recover to previous levels or if the tri-monthly degression model will lead to severly dampened demand. For the moment it appears that the majority of business in the UK solar market will remain in the large scale market.