25 May 2012

UK to make solar subsidy scheme more certain

Solar panels on a UK property. © Stuart Pearcey
Solar panels on a UK property. © Stuart Pearcey
The regulations, introduced by the UK Department of Energy and Climate Change (DECC) on Thursday, will put the countrie's Feed-in Tariffs (FITs) scheme on a more predictable, certain and sustainable footing for householders, businesses and the solar industry.

Following detailed consultation with industry and consumers, the Government is introducing a range of changes to the FITs scheme with effect from 1 August to provide better value for money and allow businesses and householders to plan with confidence.

The tariff for a small domestic solar installation will be 16 pennies per kilowatt hour, down from 21 pennies, and will be set to decrease on a 3 month basis thereafter, with pauses if the market slows down. All tariffs will continue to be index-linked in line with the Retail Price Index (RPI) and the export tariff will be increased from 3.2 pennies to 4.5 pennies.

The new tariffs should give a return on investment (ROIs) of over 6 percent for most typical, well-sited installations, and up to 8 percent for the larger bands, according to the DECC.

"The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing today provide a strong, sustainable foundation for growth for the solar sector," said Energy and Climate Change Minister Greg Barker.

"UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence."

"We broadly welcome many of the Government's decisions for how solar PV will be treated in the FITs scheme," said Alan Aldridge, Chairman of the Solar Trade Association.

Government sees a bright future for solar in the UK and expects to reflect the growing role of solar power in the UK's energy mix in its updated Renewable Energy Roadmap later this year.

Uptake by 2020 will however depend on when solar PV becomes viable with little or no subsidy and 22 gigawatts by 2020 is an achievable ambition if industry can get its cost down quickly.

That is why Government has also launched a solar PV cost reduction taskforce in partnership with industry to help drive down costs down faster while maintaining safety and standards.

The DECC also pleased to welcome plans to create a national solar center in Cornwall. The center would be at the heart of the bright future for PV in the UK.

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