The British government says that modifications to its feed-in tariff (FIT) scheme for solar photovoltaic (PV) installations are essential for ensuring the development of decentralised energy.
The government is reducing the tariffs for large-scale solar PV installations in order to protect funding for small-scale PV schemes in the household and small business sector. It carried out a fast-track review of the scheme after realising that demand for the FIT subsidy would outstrip the funding available.
“Without urgent intervention, the scheme would have been completely overwhelmed within a very short period of time,” said Gregory Barker, Minister for Energy and Climate Change, in a written statement. “It is vital that we protect the integrity of the scheme and can continue to support the ambitious roll-out of new, green, decentralised energy technologies in homes, communities and small business.”
The review also covered anaerobic digester schemes, the uptake of which had been slower than expected.
From the beginning of August, PV installations of between 50 kW and 150 kW of capacity will receive 19 p/kWh, down from 32.9 p. Installations of up to 250 kW will receive a tariff of 15 p/kWh and field-size installations of between 250 kW and 5 MW will get 8.5 p/kWh. Both larger sizes were previously paid 30.7 p/kWh.
Tariffs for anaerobic digester facilities have risen slightly to 14 p/kWh for installations under 250 kW and 13 p for installations up to 500 kW in size.
The solar power industry has criticised the move, which it fears will jeopardise investment in solar energy in the UK. The Renewable Energy Association (REA) called for the government to increase the size of the FIT budget.
“The handling of this whole affair has been poor,” commented REA Chief Executive Gaynor Hartnell. “Larger-scale PV has been demonised, when it is the most cost-effective approach. Midway through this decade we're expecting its cost to be on a par with offshore wind.”
The UK government said that opposition to changes to the FIT scheme had to be balanced against the need for a responsible approach to public subsidies. It said that every 5 MW large scale solar scheme would incur a cost of approximately £1.3 million per year, which means that 20 such schemes would incur an annual cost of around £26 million, money that could support PV installations for over 25,000 households.
“The fact remains that under the current tariffs, large scale solar PV projects are securing much higher returns on investment than the scheme intended,” said Barker. “This is reflected in the unanticipated number of such projects now in the pipeline.”
“We think government should increase the size of the Feed-in Tariff budget and encourage a healthy PV industry to establish in the UK,” said Hartnell. “But to be fair to the electricity consumer, government must be prepared to intervene to reduce tariffs when justified, and the industry must accept this needs to happen.”
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