Minister announces changes to Solar FiT from 1 August

DECC have today announced the results of the 2a consultation response for changes to Feed in Tariff rates for solar PV in a speech by Greg Barker in the Houses of Parliament. The headline changes to tariff rates are outlined below:

Changes to tariff rates

1. The headline tariff change, originally scheduled for 1st July, has been pushed back to 1st August with a headline rate of 16p/kWh for a 4kWp domestic system - This rate has been calculated from in-depth discussion with industry regarding the cost of PV systems by DECC and current deployment rates. It does not relate to the three tariff options as outlined in the consultation based upon deployment levels in the March to April period as DECC felt this would not provide an accurate picture in which to base future tariff rates on. Full details of these calculations can be found on the DECC website HERE
2. Standalone and large scale systems will receive a tariff rate of 7.1p/kWh from 1st August
3. The multi installation tariff rate for deployment of more than 25 systems has been changed from 80% of the original tariff rate to 90%. On domestic systems this equates to 14.4p/kWh based on a 16p/kWh base.
4. Export tariffs will be increased from 3.1p/kWh to 4.5p/kWh
5. Tariffs will remain index linked via RPI
6. Tariff lifetime will be reduced from 25 years to 20 years for PV systems. DECC have confirmed that rates of return will still remain at between 4.5%-8% for well sited installations despite this change.

Changes to Degression of tariff rates

Ongoing degression rates have been adjusted to a fixed 3 month timeline, starting with the first degression on 1st November. DECC have removed the 'emergency' degression rate, which could have occurred between the three month intervals, in order to provide some stability for businesses in planning for future degressions. The default degression rate will be set at 3.5% every 3 months based on over-deployment in the previous quarter. However if deployment rates are below predicted volumes then the tariff will not be decreased in the following degression quarter, up to a maximum of 9 months. Therefore the maximum time the tariff can remain unchanged, irrespective of under-deployment will be 9 months. Tariff rates will not be increased at any stage.

However, degression rates will be banded in order to ensure that over-deployment in one scale of PV does not adversely affect the tariff rates within another scale. These bandings are set out below:

1. Up to 10kWp
2. 10kWp to 50kWp
3. Greater than 50kWp

This has been introduced to provide a less volatile tariff system that does not penalise different PV deployment scales unfairly. The table below provides an example of the possible degression of tariff levels based upon a 4kWp domestic PV system:

Please note:
This table is a Regen SW interpretation of degression rates based on our first reading of the changes

Other changes

1. The mandatory ceiling for FiT licensees has been raised from a 50,000 to 250,000 customer base
2. The Phase 2b consultation is still due for release in July as previously indicated

This announcement is much as we would have expected given our discussions with DECC. We would, of course, have liked to have seen DECC go further by delaying the initial degression to later in the year in order to give industry time to recover from the rapidly changing policy. However, it does seem that they have listened to industry with regards to providing a more stable framework from which businesses can plan effectively and advise customers as to likely future tariff rates, and provided a more dynamic degression model via the bandings to allow for varying scales of PV.

DECC have also commented that they have found the feedback from Regen SW members highly valuable and have advised that they are keen to receive feedback on these changes from south west based businesses. Therefore if you have any comments on these changes please do send them to us, so we can collate and feedback to DECC on an ongoing basis.

Now we have some clarity on the future the important point is to educate to consumers that the FiT is still available and viable. Regen SW is continuing to raise awareness of the FiT through various media channels including recent press releases and interview with the BBC which is current expected to be aired on 25th May at 18.30 on BBC Spotlight.