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Mixed responses to changes in Feed-In Tariff
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The government have announced their intentions regarding the future of the Feed-In Tariff scheme, which have been met with varied responses. Rowena Mearley, of PWC commented - "Overall, today's announcement is somewhat of a mixed bag for the industry".
Mixed responses to changes in Feed-In Tariff

"It's positive news that the proposals are beginning to get more detailed, it will allow the industry to at least shrug off some of the uncertainties that have persisted since the previous announcements, and the subsequent court challenge. The overall spending envelope was extended and government is now hoping to deploy more solar than previously envisaged. That's good news for an industry that has to increase efficiency and volume in the face of the current (and future) reductions in FiTs.

"The emergence of discussion around the shortening of the FiT period is concerning, as well as whether the FiT should remain index linked. These two issues, if applied will make solar yet less attractive and this discussion has the potential to add yet more uncertainty which this industry really could do without."

"The proposed 50% cut (from 43p to 21p) to roof top tariffs remains and this seems unlikely to change. While the cut is steep, it only applies from March, so provides a window of opportunity for high activity levels over the next few weeks, perhaps similar to the extremely high levels of installations in late November/early December 2011. It shows what the industry is able to accomplish when demand rises. Given the inevitability of the cut, much of the industry will have begun to take action to adapt to the new regime.

"The government has listened to concerns around the energy efficiency rating provision and has loosened the qualifying requirement for buildings to an EPC rating of at least D, better than the original C rating. As and when the Green Deal kicks in properly - in my view around mid-2013 - these low efficiency rating will also move back onto the radar of the solar industry.

"We have long argued for a clear timetable and logical mechanism to tariffs, as in Germany for example and the government is now putting that approach into practice. I think the devil is in the detail in this package and while this gives on the whole more visibility to the industry, there are elements which will be worrying.

"The proposed mechanism post - July 2012 consists of a likely automatic degression, or reduction, and an accelerated adjustment based on deployment levels. So if deployments exceed anticipated levels, the government could reduce further the FiT rate.

"Given the current uncertainties around costs, it feels like a 6-monthly 10% reduction on tariffs risk creating a severe stop/start market and I think that a lower base rate should be considered. The deployment adjustment is sensible, but it requires clear communication of the government's envisaged annual deployment levels. Also, given the very different dynamics of the different bands, this needs to be considered separately for domestic, commercial and stand-alone systems.

"The emergence of discussion around the shortening of the FiT period is concerning, as well as whether the FiT should remain index linked. These two issues, if applied will make solar yet less attractive and this discussion has the potential to add yet more uncertainty which this industry really could do without."

Climate Change Minister Greg Barker announced...

• A tariff of 21p/kWh will take effect from 1st April this year for domestic-size solar panels with an eligibility date on or after 3rd March 2012. Other tariff reductions apply for larger installations.

* Properties installing solar panels on or after 1st April this year will be required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for a full FIT. The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical at this stage. We estimate that about half of all properties are already eligible for a ‘D’ rating.

• From 1st April 2012, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FITs for other solar PV installations. This reflects the lower costs of such installations, as they benefit from the economies of scale. Based on the feedback received, the threshold is set at more than 25 installations. Individuals or organisations with 25 or fewer installations will still be eligible for the individual rate. DECC is now consulting on a proposal that social housing, community projects and distributed energy schemes be exempt from these multi-installation tariff rates.

• The tariff for micro-CHP installations will be increased to recognise the benefits this technology could bring and to encourage its development.

This was welcomed by Don Leiper, Director of New Business at E.ON. He said: “Our relationship with energy is changing and technologies like microCHP will see people quite literally taking their energy needs into their own hands. Generating power at home, not just consuming it, means people can cut their bills and their carbon footprint.

“Customers seeking to invest in these new technologies want stability, both in terms of power generation and finance, and we hope this announcement provides a more solid platform for when people look to make the long-term commitment to renewable energy.

“The Government’s support for microCHP technology is a key step towards building a mass market for what is a smarter home heating and power solution that can save customers money and contribute to saving the planet.

“E.ON has been working with our technology partners for many years to develop whole home energy solutions and a range of microCHP products, which includes both Stirling engine and fuel cells variants and are working to bring these to market in the near future.”

Under the new Feed-in Tariff scheme homeowners installing microCHP could see financial savings of more than £600 per year1, including electricity savings of £194 2 and export payments of £46 3

Engine-based microCHP systems are fuelled by natural gas but generate electricity as well as providing heat and hot water. Compared to a standard heating system, they could displace more than 1.5 tonnes of CO2 each year for a typical home. Fuel cell based microCHP technology could displace more than 4tonnes in almost any home.

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