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Experts in Energy


Government indicate further potential cuts to solar

The Government has recently announced the end to Renewable Obligation Certificates for sub 5MW solar parks from April 2016. The announcement comes one year earlier than scheduled a long side confirmation that the government will consult on further tariff cuts to the Feed-in-Tariff scheme above the standard automatic digression model that is currently implemented and are proposing abolishing pre-registrations.

At present, the automatic digression model sees a reduction of 3.5% in the Feed-in-Tariff incentive every 3 months and it is possible for systems above 50kWp to lock into the current feed in tariff level by submitting a pre-accreditation to Ofgem if proof of planning permission and grid acceptance is provided to allow a further six months to complete the installation.

Both Government incentive schemes were implemented to support investment into low carbon technologies which will ultimately provide the UK better security, lower wholesale costs and of course, help tackle climate change.

The Feed-in-Tariff was initially implemented during a Labour government with a clear strategy announced to help tackle rising energy costs and its security along with helping the UK to meet climate change targets. The coalition government continued the support whilst at the same time making the necessary cuts in line with the reducing costs of technologies. They also instigated an automatic digression model providing a more sustainable solar industry with better investor confidence.

The Conservative government expressed its support to renewable technologies and climate change targets during the election campaign but the solar industry is now waiting with baited breath as to how the announcement of the latest changes will be implemented in order to maintain investor confidence and steady industry growth and deployment.

The series of latest changes currently provides uncertainty to the industry and damages investor confidence. The potential of removing the pre accreditation puts doubts on the tariff support for all systems above 50kWp. A larger installation, particularly ground mount projects, can take longer than 3 months to complete from start to finish which doesn't fit with the current automatic digression model that can see a tariff change every 3 months.

As a company we are passionate about the success of the solar industry and are demanding further information along with fellow industry leaders to be released as soon as possible as being drip fed information is only damaging the industry. Experience dictates it is not the cuts that damage the industry the most it is the uncertainty for investors.

It is clear that Solar can be one of the first renewable technologies to be subsidy free in future years however, it is very important how the government handles this transition. Support needs to continue to aid solar deployment which will ultimately help the government achieve their longer term goals.

Alongside the potential cuts to subsidy, it is also important to consider other issues facing the industry such as grid capacity to add further sizable installations. The Renewable Energy Association is pushing for a speedy review of the UK's grid infrastructure to see if the grid can take additional renewable capacity without reinforcement. The REA is critical of the current "piecemeal" approach to grid reinforcement which has severely restricted the growth of solar.

It is our opinion that the government is trying to cut back on the companies that are exploiting the solar installation purely for profit and not just to offset their electricity usage. The larger scale solar parks may be a thing of the past with the industry moving to sub 250kWp installations where they can offset their own electricity usage.

The UK solar industry has taken hit after hit on subsidy support since the introduction of the Feed-in-Tariff in 2010. The industry however, has always adapted and since the introduction of the incentive schemes to support solar there has been over 10.5GW installed under both the renewable obligation certificates and Feed in Tariff; proving solar to be one of the most cost effective renewable technologies.

Until the public consultation is released everything is speculation and should not cause any alarm. Investors currently looking into solar should continue to do so diligently. Do not run with the first company, look around and make sure you are dealing with a reputable and knowledgeable company that can support you in future years.

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