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Regen SW comment on Feed-in-Tariffs
We have asked Regen SW to comment on the current position regarding Feed-in-tariffs (FiT) for new PV systems. We have printed their thoughts below.
With the new lower prices for systems that we have managed to obtain we believe that a simple return (ROI) of around 10% with the Governments proposed lower FiT is possible. There is the chance, depending on the outcome of the High Court legal battle by DECC, that the actual income could be twice as much on systems installed before 3rd March 2012. After 31st March lower FiT’s and more onerous conditions for new systems are likely to be imposed. If you are considering a PV system we would suggest you look at doing it sooner rather than later as there may be another “rush” to install systems in February and March by customers looking to benefit from higher tariff levels, whilst avoiding more stringent rules required for the energy efficiency of their properties.
Regen’s comments are –“The latest round of the legal battle over the Feed in Tariff has led to yet more delay over the future of scheme with the judges indicating they could take weeks to come to a decision on the government’s appeal. So where does that leave those thinking of installing solar panels?
What is clear is that anyone installing solar panels before 1st April 2012 will get at least the Feed-in tariff rates proposed in the government’s consultation (21p per kWh for schemes less than 4kW) and could receive the rates prior to the consultation (43p per kWh for sub 4kW schemes) if the government loses in court.
Implications of either outcome of the appeal can be summarised by the following table:
Legal Battle
The legal argument is over whether the government acted lawfully in proposing a change in Feed in Tariff rates from a date (12th December) before it had completed the due process needed to make changes to the regulations governing the scheme. In December a court found the government approach to be illegal. Subsequently the government appealed in January and we now await the conclusions.
If the government wins its appeal it will announce the results of its consultation and lay regulations to implement its conclusions. It is almost certain that it will reduce rates for any PV installations installed after the 12th December to those rates proposed in the consultation. Other proposals, such as the introduction of minimum levels of energy efficiency requirements of properties, are also likely to be introduced.
However, should the Government appeal be rejected, DECC have announced a contingency plan whereby FIT installations with an eligibility date on or after 3rd March 2012 will receive the lower tariffs proposed in the Phase I consultation document.
There would, inevitably, be a further rush of installations taking advantage of the high rates between the judgement being announced (probably early February and the regulations coming into effect to reduce rates (3rd March 2012).
Longer Term
The government has promised a ‘phase 2’ consultation on the overall shape of the Feed in Tariff across all technologies. This will look, for example, at how rates are adjusted more effectively than the current chaos. If it wins its appeal we can expect that consultation rapidly. If it loses we would expect this to be delayed whilst the implications are considered, particularly in relation to the impact on the overall FiT budget.
Whatever the outcome we believe it is likely we will see the Feed in Tariff move to 9p per kWh for PV systems of all sizes in the short to medium term (possibly with a better rate for community led schemes). This is equivalent to the level of subsidy offered to offshore wind schemes, and the government’s Renewable Energy Roadmap document has made clear that any renewable energy subsidy above this level will be carefully scrutinised. Once PV can compete with other technologies at this level it will be much less vulnerable to short term policy shifts.”
If you would like to discuss these points or ask for an up to date quote please contact us on 01769 575674.
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