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Certainty for feed-in tariffs

From panels on roofs glinting in the sun, to churning turbines in streams and brooks, home-grown local energy generation is really flourishing across the UK, supplying thousands of our homes and businesses with clean green power.

This revolution in small-scale green energy has been driven forward thanks to support from the Government’s feed-in tariff (FiTs) scheme. FiTs are available for a range of technologies including anaerobic digestion, micro CHP, wind turbines and hydro power. But almost 99 percent of uptake under FiTs has been for solar panel kit and it is easy to see why. Solar is reliable, intuitive, easy to install and a great solution for people worried about rising electricity bills.

As the cost of installation falls, the number of panels on roofs grows, and solar is now common place across the nation. It’s fantastic to see this type of renewable energy starting to reach its potential.

As the solar industry is well aware, I’ve had to take some difficult steps over the past year or so to ensure that we stay within our budget for FiTs. This is due to rapid uptake, which in itself was a result of dramatic reductions in the costs of solar PV. For instance, in April 2010 a typical 2.6kW installation was estimated to cost £13,000 – incredibly, it now costs less than half of that. In extremely challenging economic times we must ensure that we don’t offer excessive top rates of return.

I strongly stand by the changes we have introduced; they are necessary to improve the scheme and put solar on a path to a sustainable future. Solar PV continues to provide a very good return on investment for households, offering 6 percent or more for those with a suitable roof. The clear, predictable path for tariffs we have introduced will allow businesses and households to invest with confidence, no matter when their panels are to be installed.

You just have to look at the figures to see that there is still a huge national appetite for solar. Almost 110MW has been installed since April 1, with a total of over 170MW installed since new tariffs were introduced on March 3. Weekly installations are up 50 percent on this time last year, and nearly 3,500 solar installations were installed in the week ending July 1. These are hugely encouraging numbers, clearly underlining that solar continues to thrive.

Recent announcements from the industry are further testament to the excellent health of solar in the UK. Proposals for centres of excellence in manufacturing, research, innovation, measurement and training are popping up on a regular basis and I hope they will become a reality within the next year.

I was also interested to hear that recent market changes in Japan have led to increased output at Sharp Solar’s manufacturing plant in Wrexham. Some of the solar panels are also being exported to Japan, Sharp’s home country. This really highlights the attractiveness of the UK as a home for manufacturing investment as well as innovation.

Moves like this not only sustain jobs in the solar sector but also bring new opportunities and innovation, and show a huge vote of confidence in the outlook for the UK solar industry.
With the cost of panels and inverters coming down significantly, I now want to work on bringing the price of installation down. That is why I have set up a cost reduction task force with the industry to help do just that. We will also update our vision for renewables later this year to reflect solar’s increasingly important role in meeting our renewables targets.

But FiTs aren’t just about solar – there’s support out there for all kinds of other small-scale renewables for our homes and businesses. I want to see many more households getting stuck in, and businesses taking the lead in the growing global market for green energy.

When thinking about small-scale renewables, it’s important to remember that not all technologies under FiTs are alike. Some, like hydro schemes, have long lead in times to get projects from the drawing board and into rivers. That’s why from December 1 this year new projects over 50kW in size will be able to benefit from preliminary accreditation including a tariff guarantee, so investors can make decisions with confidence and be sure of their rate of return even before their projects are up and running.

I want to see more communities explore the benefits that clean, green local energy has to offer. That’s why I want to ensure community scale projects are able to properly benefit from FiTs. Local energy generation is a key part of our energy future and local communities, with their drive and innovation, must be at the very heart of this revolution. The benefits of producing energy at a local level are clear. Not only can green energy help cut carbon and help us meet our renewables targets, it can also help cut our dependence on expensive, imported fossil fuels and improve our security of supply.

From December 1, community PV schemes and school based projects will be exempt from the current energy efficiency requirement, to spur on these type of projects. This recognises the hard to treat nature of community buildings often involved in such schemes, and the educational benefits that they can bring.

Alongside these changes we are also changing some of the tariffs for new non solar installations under FiTs from December 1 to ensure, like solar, we are not offering over the top rates of return, but at the same time ensuring it is still attractive to invest.  We are also introducing a way to reduce tariffs over time, providing long term certainty for householders and businesses.

With FiTs installation numbers up, promising developments within the industry and our comprehensive review of FITs now complete, we are firmly on the right track. I see an exciting and sustainable future for solar and other small scale renewables in the UK. One where the Government and industry work together to ensure these crucial green technologies continue to make a real difference.

7 Responses to “Certainty for feed-in tariffs”

  1. Charles says:

    The minister is seemingly trying to provide certainty and to reassure members of the renewable industry, but it will take a lot more than a simple blog article to do this – as Peter James’ response clearly demonstrates.

    It is worrying to hear politicians talk of trying to bring down market prices of services, as is done here with the cost reduction task force aimed at reducing solar panel installation costs. What makes any politician think that they will succeed where (arguably highly) competitive market forces apparently haven’t?

    By squeezing small firms margins further, they are then forced to choose between staying in the market or reducing quality. Surely, neither are outcomes that the minister wants?

  2. John Edwards says:

    Solar PV installations are up this month as a result of the last dash for a realistic FIT. which will come to an end on the 1st Augusr. 2012.
    You are firmly on the right track to taking the installation of solar pv back to the people who thing it is a good thing to do for the sake of the environment and away from the potentially much larger number of people who thought it was a good investment.

  3. s. davies says:

    the cost of installing solar panels, for most home owners, is just that bit too much in our present situation.
    if the government were to launch a scheme to provide possibly free panels/or at a reduced price and regulated,or provision of installation by local councils. the cost firms quote vary vastly, there be cheats out there!.
    the money to provide this could be recouped by not giving homeowners money or credit back for what energy goes into the national grid over what they produce and use in the home.
    i know this is a simplistic view but it maybe could be worked on !

  4. [...] Department of Energy and Climate Change Blog [...]

  5. While the stability in the pv market is welcome and the relaxation of the EPC requirement on community buildings is also welcome. I have yet to see anything that will help rural households to get their fuel bills down. Houses with solid walls off the gas grid almost never reach D rating and pv is one of the most positive moves they can make. When will there be a relaxation of the D rating for solid wall houses not on the gas grid? All these householders want is equality with other householders who have access to natural gas.

  6. Tim Evans says:

    DECC ROC Rebanding Announcement

    My name is Tim Evans, better known to my friends and colleagues as Private James Ryan of the UK’s fledgling Renewable Energy Industry. Unlike James Ryan, my mother does not have four sons, three of whom have been killed in action; instead she has one son (me) who has been shot in the back three times, by friendly fire.

    I took my first bullet in 2006 when my new biodiesel business was strafed by the Red Army whilst phasing out the tax break for bio-fuels. The business haemorrhaged badly and succumbed to its wounds within two years of producing its first litre of fuel.

    Undeterred, I launched into my second UK campaign and started a new business based on biogas, from the anaerobic digestion of farmyard manure and wastes. I must have been looking the other way when, after many (too many) months of deliberation, Feed in Tariffs were introduced by the Red Army at levels that made the generation of electricity from biogas completely unviable.

    The bullet caught me in the shoulder, narrowly missing my heart which has been yearning for a stable Renewable Energy market in the UK ever since I had experienced one first hand during covert operations in Germany almost 20 years earlier. This time my injuries were more severe and I needed a lengthy period of convalescence in a field hospital. Fortunately, my recuperation was funded by special support services funded by tax payers.

    Ever the optimist and having crawled my way out of yet another crater, I called up the Blue’s and Yellow’s Cavalry and dared to believe that they would be more effective than the Red Army that had gone before. Indeed, the cavalry rode over the first hill with an excellent and well received battle cry. The renewable foot soldiers believed it would secure the bridgehead and feeling much better in myself, I embarked upon setting up a third new business promoting Solar PV. The optimism was misplaced and there was a serious and unexpectedly swift retreat slashing Feed in Tariffs as a rear guard action whilst the Blues and Yellows began slashing at each other.

    I had actually anticipated this third bullet but it was too fast and it ripped into my buttocks with devastating results. The pain was excruciating.

    My mother thought that I had finally been lost in action and began to prepare for the third letter from my Commanding Officer. Astonishingly however, it never came. In its place, battle scarred and bruised, I crawled up the garden path to the kitchen door and announced that I was still determined to believe the green rhetoric of the Blues and Yellows. Afterall was it not reasonable to assume that by mixing blue and yellow, that is exactly what I would get. Reluctantly, I told my mother that I had resolved to join forces with the Germans. I had no resources of my own left to continue the battle alone.

    In a last ditch attempt to reduce the UK’s carbon emissions, contribute to its fuel security, generate sustainable, green electricity, reduce the amount of waste going to landfill, improve the balance of payments, invest large sums of money and most importantly, create jobs and pay taxes, I had decided to work for a German agent to develop a state of the art biomass power plant on the coast. My mother was less than pleased to see me going over the top again and was definitely uneasy about the planned collaboration.

    Having taken three bullets already I had become adept at dodging everything from small arms fire to grenades and even the occasional RPG. I sidestepped and jinked through the planning process, crawled on my belly through the smoke screen put up by the Environment Agency, Natural England and numerous other resistance fighters and after handing over a seven figure sum to my would-be captors, scrambled over the wire with a Renewable Energy project that was finally ready to go.

    Or at least that was what I thought. The fourth bullet was already winging its way towards my temple. My poor mother, what was she going to say? Three times she thought that I had bought it. Three times I had come back from the dead and then, on 17th July, my CO received word from Whitehall that the ROC rebanding review, essential for the success of the mission, had been derailed somewhere along its route. The CO suspected that it had been sabotaged, perhaps by an IED (Inermis et Desperatis).

    The fourth bullet is going to be fatal. I can see it coming. I know that it is going to hurt and I know that my good intentions will finally be snuffed out.

    Of course, the only renewable technology that I have never tried is wind, so when the fourth bullet finally slams home, I have arranged with my mother for me to be cremated so that my ashes can be scattered into it. Actually, thinking about it, burial may be a better option, the consolation being that, if not renewable, sustainable or recyclable my life will at least have been compostable.

    Perhaps that will be a worthy tribute on my headstone.

  7. Peter James says:

    The industry needs stability which will allow companies to plan and customers to purchase with confidence. This has been completely eroded since the first false deadline was so badly handled. When will non domestic RHI be fit for purpose and when will we see the domestic RHI sorted. New initiatives are fine fix the problems first.

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