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Government to Slash Feed-in Tariff for Solar PV

Energy Saving Trust FIT review fact sheet

Fact Sheet on the proposed changes to Solar PV Feed-in-Tariff rates

Last updated 26 October 2011

Introduction

The UK Government is proposing to reduce Feed-in Tariffs (FITs) for new solar photovoltaic (PV) installations as part of their comprehensive review consultation. See  www.decc.gov.uk/fits

If you install solar PV and your FITs application is received by your FIT supplier (also known as FIT Licensee) on or after 8 December 2011, you could be affected by the proposals.

Please note that these proposals are currently under consultation and are therefore not final.

However, we recommend customers should use the figures in the consultation if they are planning to install after 8 December 2011.

Only PV systems are covered by the UK Government’s current FITs consultation. Other FIT-eligible technologies will be considered as part of the second phase of the comprehensive review due to be published shortly.

Summary of proposals

The UK Government proposals which affect householders most are:

  • A reduced rate of 21p/kWh for solar PV installations <4kW – tariffs will be introduced from 1 April 2012 and will affect all installations with an eligibility date on or after 8 December 2011. See definition of eligibility date below. This tariff rate is designed to provide householders with a rate of return of around 4%.
  • New domestic energy efficiency requirements – from 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level C or above/which has completed all „Green Deal. measures. Where a domestic property does not meet these energy efficiency requirements, the Solar PV installation may receive a lower tariff.

The table below compares typical income and savings made for an average sized solar PV system in the UK along with simple payback period (cost divided by combined income and savings)

FIT Rates Total annual earnings and savings with a 2.9kW system Simple payback (years)
Current 43.3p/kWh £1,190 10
Proposed 21p/kWh £    640 18
  • 2.9kWp system, install cost of £11,500
  • Total earnings and savings include income from the generation tariff, export tariff on 50% of total generation and up to 25% of generation used on site.
  • Simple payback will depend on capital cost so the simple payback periods may vary depending on quotes received. Cost of solar PV has come down significantly over the years so we would expect the simple payback period to come down gradually.
  • Annual generation has been calculated as 853kWh/kWp using the Energy Saving Trust Solar Energy Calculator (see below) using the postcode SW1A 0AA (Westminster Palace)
 

To find out more about how this will be implemented, please download the full fact sheet:

 

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Greg Barker’s Speech for Solar Power UK

Greg Barker’s Speech for Solar Power UK

27 October 2011

Check Against Delivery

SCENE SETTING

Five years ago I wrote Power to the People. A pamphlet urging a radical shift to a far more decentralised local energy economy.

A shift away from the dominance of a few energy giants towards a diverse, innovation rich energy sector.  A new vision of energy generation that empowers homes, businesses and communities.

Since then, all that I have seen and all that I have learned, first as an Opposition spokesman and now as a Minister in Government, has reinforced my strongly held belief that the successful energy models of the 21st Century will be far more decentralised, local and flexible.

Decentralised energy drives innovation. Decentralised energy fosters a wide range of low carbon technologies. Successful decentralised energy economies promote choice and competition.

Power to the people, I called my pamphlet in Opposition. Power to the people we are determined to deliver in Government.

But my determination to drive this new cleaner, greener model of consumer empowering energy generation has to be seen in the wider context of the Coalition’s wider green agenda. We are determined not just to drive down carbon emissions but to build a successful, thriving, prosperous low carbon economy.

Last year, the Prime Minister pledged that this historic Coalition would be the “greenest Government ever”.

16 months on, I am here today to tell you that the Coalition will deliver on that pledge. Judge us on our record.

  • £3 billion for the new Green Investment Bank
  • Royal Assent for the Energy Act that will unleash the Green Deal, a World first programme to drive the biggest housing retrofit scheme since the Second World War
  • £860 million in the Spending Review for FITs
  • £860 million for the world’s first RHI
  • £4.6 billion for science and research programmes, including key support for low carbon technologies 
  • £1 billion for the World’s most ambitious Carbon Capture and Storage programme
  • Our radical proposals for Electricity Market Reform will open up the market to new players, new technologies and make Britain the Saudi Arabia of off-shore wind
  • And in Whitehall we not only committed to the 10/10 campaign, we slashed our own emissions by 13.8% in 12 months

This Government is walking the walk.

And since that election, we’ve made a start at rebalancing the architecture of Britain’s electricity supply, bringing power to the people and allowing them to generate their own electricity on their homes, their schools, their work places.

Over 100,000 homes now generate some of their energy from their own renewable power stations. And to date solar has been by far the most popular technology with consumers. It’s easy to see why: it’s simple, accessible, reliable and fits discreetly into homes and communities.

But this is just the start. I’m personally committed to ensuring that your industry can prosper in the longer term, sustaining green jobs at a critical time for our economy, jobs that people can build a career on. Jobs that can help drive the recovery and show that Britain can lead the way in low carbon innovation and small scale renewables.

This room holds representatives from the whole UK supply chain. From manufacturers to inverter companies, from installers to retailers and financiers, all of you employing people and all of you helping to drive out the message that decentralised energy is available, affordable and easily obtained.

Solar PV has delivered by far the most installations through FITs so far, and I hope that the other technologies can learn from the incredible growth your part of the industry has seen. I am a strong advocate of solar in the right locations but I also want to see a strong spread of UK renewable technologies benefiting from the FIT.

But let’s not kid ourselves. Much of the growth in PV has been as much about consumers accessing the Government backed tariff as accessing the technology. High net worth individuals chasing returns which are now easily reaching double figures at a time when interest rates for savers have collapsed to an historic low. That can’t be right. And I know responsible voices in the industry have been worried about this for some time.

 
NEW ECONOMIC REALITY

So, however convinced we may be of the long term potential of this exciting technology, we have to face up to the economic reality that ever other sector of the economy is challenged by.

The Green Economy does not exist in a bubble. Yet the subsidised returns we have seen on solar PV investments – funded from consumer energy bills – are unsustainable at a time when National Savings have pulled their index linked bonds, interest on savings accounts has plummeted and the stock market has dropped.

And of course, we will all be watching our energy bills this winter. This is the new reality, and it is in this light that we must consider the future for this industry. We have seen boom and bust in solar right across Europe. We have to make sure that UK solar has a steadier, clearer, sustainable growth path, that justifies the subsidy from all consumers, demonstrates clear value for money versus other low carbon forms of generation and can show a clear path to grid parity.

I know that that Solar PV is a transformative technology, easy to understand, quick to install and completely reliable. But critically, PV costs have plunged since the tariff levels were set, down by as much as 70% in 2 years according to Bloomberg. At rates like that, this sector should demonstrate clearly and openly that it is passing on these exciting and dramatic price reductions to consumers. So the tariff levels need to reflect these new prices. By using these incredible cost reductions, the most dramatic of any energy generating technology, you can build a compelling case for grid parity, not as a concept but as a reality. I believe solar is already well on the way to that destination.

But there is a delicate balancing act to perform to avoid boom and bust, as shown by the bubbles in countries like Italy, Spain and France, fuelled by over generous feed in tariffs.

The Coalition inherited a slow, unresponsive and misinformed scheme but I still believe passionately that Feed-in tariffs are essential.

 
GERMANY AND DEGRESSION

Around the world, many look to Germany as the birthplace of feed-in tariffs. Germany got many aspects of their FITs scheme right – I know that and you all know that. That is why I want our FIT to take the best learning from Germany and apply it to the UK. I have been there myself to talk to senior Ministers and industry practitioners. But they will also tell you their system is not perfect and many worry about the embedded cost of the FIT system.

We will consult later in the year on how we respond to market changes and assess PV costs and take up on a regular basis, and revise our tariffs accordingly. Industry is critical to this process. We want to work with you to agree the future path of tariff reduction, take politics out of the sector and deliver what I believe the industry needs and what the last Administration’s scheme failed to deliver: T.L.C. not tender loving care but transparency, longevity and certainty.

We fought hard and won a good settlement of over £860m in the spending review to subsidise small scale FITs, an extraordinary achievement as we grapple with the deficit and consumers struggle with rising energy bills.

The challenge now is to use that public investment to obtain the widest possible deployment. I don’t want a tariff that gives bumper returns to a lucky few but a tariff that incentivises sensible deployment, in the right place, on the right buildings in the greatest numbers.

We have got to make the FIT more intelligent, more nimble, more dynamic and responsive to market development and crucially, better value for money. But I can’t do that on my own. I need your help.

 
THE REVIEW

The FITs Scheme has to live within the budget, so while I welcome the fantastic success of the scheme, with over 100,000 installations representing more than 305 MW of installed capacity you don’t have to be a Nobel prize winning economist to realise that solar is burning through the budget at an unsustainable rate.

So we will be launching a consultation very shortly that focuses on addressing the budgetary problem. I believe that Solar PV can have a strong and vibrant future in the UK, and making changes are vital if we are to ensure a lasting FITs scheme to support that future. We have inherited a scheme in the UK that wasn’t fit for purpose, so now we must do the same in order to preserve it.

Yes, the decisions we need to take are tough. I know that many of your businesses depend on the FITs levels for your success, at least in the short term. But we cannot escape reality: this is a different world to the one in which FITs were launched. In particular we must provide value for money to bill payers. I cannot preside over a scheme which allows a solar panel installation in  some of the least sunny locations in Britain to generate returns of more than 12%.

Being sensible with tariffs means there will be more money to go round, to spread more widely and thus allow more people to benefit. In the long term this should mean more customers for your companies, not fewer. It should also mean more interest in your products and the solutions you provide and that are on show here today and more opportunities for diversification.

The 100,000 FITs installations we have today are only the start.

Lower tariffs would mean uptake with FITs support could continue to grow in a sustainable way, and the microgen sector can be the engine of a green economic recovery. The future of solar PV in the UK needs to be one based not on subsidy but on sound underlying economics.

We also need more transparency. You need to know how much money there is and what has been installed to date. The public needs access to the best information to make informed decisions about all Microgeneration. The scheme needs to be intelligent and responsive to changes without the need for stop start reviews, we owe you that much.

We will look at streamlining the scheme to make sure it works for industry and consumers with the minimum of bureaucracy. We want a system in place to provide the longer term certainty investors are seeking.

And we will make sure that the interests of bill-payers are protected by making sure the scheme is not open to abuse.

I am also keen that we should establish FITs as part of a whole-house approach which prioritises energy efficiency and supports the right low-carbon heat and electricity technologies, so the consultation will look at how we can use the scheme more smartly to drive this holistic approach.

BIG SOLAR

Many thought I should not have reduced the tariffs of large scale PV installations this summer. But politics, particularly in tough economic times, is about clear priorities. I am even clearer now that we did the right thing. As much as 150 MW of large-scale generation was able to install at the old high rates.

Had I not acted when I did, the run on the budget could have been disastrous. There would be even less money for households, schools and communities and instead of amending the tariffs today, I could have been closing the Scheme.

BUSINESS OPPORTUNITIES (GREEN DEAL AND FITS)

I am also clear that there needs to be much greater coherence right across the green agenda. The Green Deal and energy efficiency measures, Feed in Tariffs for Microgeneration and the RHI need to work much more effectively together, and so must the industry.

The wider context is also vital in deciding what we do next with FITs. Fuel bills are only going in one direction. You are all energy users, and I’m sure the recent hikes in bills will affect your family this winter. Our top priority must be to help drive energy savings to help keep bills down. And the new Green Deal will a key part of delivering these savings.

The Green Deal will be the biggest home improvement plan since the second world war, helping to insulate people against rising energy prices and creating homes which are warmer and cheaper to run. We all need to become more efficient, our houses, schools and offices.

To help deliver the most cost-effective building carbon savings, the Green Deal and the Feed in Tariff must be brought together as a coherent package for consumers.

So, I can announce today that we will be bringing forward proposals to ensure that all new domestic PV sites from April 2012 must meet minimum energy efficiency standards.

It cannot be right to encourage consumers to rush to install what are still expensive electricity generating systems in their homes before they have thoroughly explored all of the sensible options for reducing their energy consumption first.

Frankly, such a standard should have been a pre-requisite for accessing the FIT subsidy from day one. And I know many in the industry saw this from the outset. So I will be working closely with you, through the Comprehensive Review, to put this in place.

The consultation will also ask how we might do the same for business premises and non domestic sites in the future.

No more PV subsidy for energy inefficient buildings.

But this is not a brake on your businesses but a new green business opportunity. This will encourage companies like yours to diversify into new sectors and join the transformation of the energy efficiency market with the same gusto as you have microgeneration. We will be consulting on the detail of those standards to make sure we get them absolutely right, because we recognise the need to keep the policy simple, cost effective and deliverable.

I also want to say a few words about solar thermal and the host of exciting heat technologies that will be supported by the world’s first Government programme to support renewable heat: the RHI. The fact is the UK is leading the world in renewable heat, completing the picture.

The domestic pre-cursor to the RHI, the Renewable Heat Premium Payment, was launched this Summer and has already allocated thousands of vouchers to cut the price of a solar thermal system. Following a short delay from Brussels I am pleased to announce that the full RHI is all set to launch next month.

As part of the new effort to drive a whole-house approach, solar thermal will have an important role to play alongside PV and other innovative technologies. I am keen to see a much greater integration of solar thermal and PV offerings in the marketplace – providing consumers with the best advice and the right technologies for their situation.

In addition, following a recent competition for social landlords, I will  shortly be announcing support for 34 renewable heat projects from social housing providers, to the tune of more than £4m – an increase of 33% on the original budget set aside for this competition.

However, unlike FITs the take up under the RHPP is marginally slower than expected, particularly for solar thermal, and I would urge you all to embrace this scheme which is due to finish at the end of March next year.

There are opportunities for smart, agile companies to take advantage of a brand new market, creating green jobs and helping to drive forward the growth this country needs.

SUM UP

So in conclusion, this conference, the biggest PV event in the country, is testament to the entrepreneurship that this industry has shown, I am determined that together we will forge a sustainable future for Solar PV in the UK.

To do that we have to navigate our way through a challenging time for the industry, staying within budget and showing the critics and sceptics that solar can deliver good value for money.

Let me be absolutely clear, I haven’t come here to kill the tariff scheme, I want to fix it, enhance it and put the whole industry on a sustainable, credible economic path to a bright and exciting future.

Chris Huhne’s speech to the Renewable UK Conference

26 October 2011


Check against delivery

I’m delighted to be here today, at Renewable UK’s annual conference.

Our location is rather appropriate. Manchester was the thumping heart of the industrial revolution. This was the world’s first industrial city. It is home to the first industrial canal, and the world’s oldest railway station.

The foundations for our prosperity were laid here. The engines which drove Britain’s extraordinary economic growth were built here – from the spinning mule to the steam engine.

We could not have picked a better place to discuss their modern equivalents.

Revolution

Renewable energy technologies will deliver a third industrial revolution. Its impact will be every bit as profound as the first two. My argument today is a simple one: the revolution has already begun.

From the Western Isles to the Isle of Wight – across the length and breadth of Britain. New companies are creating new jobs, delivering the technologies that will power our future.

As we look to pull ourselves out of recovery and back to prosperity, renewable energy can light the way.

Today, I want to look at the contribution renewable energy is making to our economy right now. The investment it is sparking,  the jobs it is delivering, the growth it is creating.

And I will look at what we can to do encourage that growth – and sustain those jobs.

But first, I want to take aim at the faultfinders and curmudgeons who hold forth on the impossibility of renewables – the unholy alliance of climate sceptics and armchair engineers who are selling Britain’s ingenuity short.

"Renewables are too expensive", they cry. "They cannot deliver energy at scale.

"They are uneconomic, unreliable and unwanted."

It is time to retire these myths.

Money

Let us start with the most egregious: that renewables are too expensive; that they could not exist without public subsidy; that they are held up by government cash alone.

Last year, global investment in renewable energy rose by 32% to $211 billion. And $142 billion of that was new financial investment, which excludes government and corporate R&D.

Renewables are grabbing a large and growing share of new energy investment.

Yes, some of that investment is attracted by public subsidy. But globally, subsidies for fossil fuels outstrip subsidies for renewables by a factor of five.

We subsidise renewables to bring on deployment and reduce costs. And we’ve seen some remarkable successes: the cost of solar energy just keeps on tumbling.

Right now, support for renewable energy costs the average household less than sixpence a day. But decades of underinvestment in energy efficiency and reliance on fossil fuels costs us much, much more.

About half of the average household bill goes on wholesale gas and electricity costs. These costs are highly volatile, and as Ofgem make clear, the higher gas price is the real reason bills have been going up over the past eight years.

That is why we need a flexible energy portfolio.

And that’s where the counter-argument of the climate sceptics falls down. "Forget wind farms", they say. "Shale gas will be our saviour. We should abandon everything else."

I don’t believe government should pick winners. And if you do, I refer you to a Department of Trade and Industry white paper from 2004 that estimated oil would reach $23 per barrel by 2010. Even last year my own Department forecast oil at $80 per barrel. Brent crude is currently trading at $110 per barrel.

Lashing our economy to a single energy source is a risky business.

We don’t yet know the full extent of shale gas here; how economically or environmentally viable it will be to extract, or by when. At best, it is years away.

Unconventional gas has not yet lit a single room nor cooked a single roast dinner in the UK.

Yet those who clamour loudest for "realistic" energy policies would have us hitch our wagon to shale alone. Shale gas may be significant. It is exciting. But we do not yet know enough to bet the farm on it. Faced with such uncertainty we do what any rational investor does with their own pension fund – we spread our risks, we have a portfolio.

Capacity

The second fallacy is that renewables cannot deliver energy reliably or at scale.

But today, more than 10 gigawatts of our electricity capacity is renewable. That’s enough to power six million homes.

And with every passing year, renewable energy takes over another percentage point of global electricity capacity.

In 2007, 5% of the world’s electricity was renewable. In 2008, it was 6%. In 2009, 7%. And last year, 8%. And it’s still growing. More than a third of the new capacity added last year – some 60GW – was from non-hydro renewables. The message is clear: when we build new power plants, increasingly we choose renewables.

In fact, renewable energy can make our system more secure – not less. According to the International Energy Agency, renewables increase the diversity of electricity sources, making energy systems more flexible – and more resistant to shocks.

Yes, some renewable technologies are intermittent. But the Committee on Climate Change estimates that even with 65% of our energy provided by renewables in 2030, intermittency may cost just 1p per kilowatt hour.

After all, biomass is instantly dispatchable. And providing back-up for intermittent renewables is just not that expensive. We already swing from a low of demand of 40GW to a high of 80GW every day. Peaking plant has long been part of our mix. Without such backup the nation’s kettles would be cold in the Coronation St ad breaks.

Every year, renewable energy is attracting more investment and delivering more capacity. It is also gathering more support. One hundred and nineteen countries have renewable energy targets or policies – up from an estimated 55 just six years ago.

Attractiveness

That brings me to the third great misconception about renewable energy: that it is unwanted.

Earlier this year, Ipsos MORI polled a thousand UK adults on which energy source they preferred. By a clear margin, people favoured renewables.

Eighty-eight per cent of those polled viewed solar power favourably; 82% for wind, 76% for hydroelectric, 57% for biomass.

The highest placed traditional energy source for electricity was gas, at 56%.

Seventy-three per cent of people would support a new wind farm in their area, as opposed to just 21% for a new coal plant.

When you get behind the headlines, you find that support for renewable energy is strong – and growing.

And so is its contribution to our economy.

Economy

Across the United Kingdom, renewables are providing jobs, investment and growth.

And the numbers are really starting to add up.

Over the last financial year, nearly 4,500 new jobs were created in the low-carbon sector, which grew by 4.3%.

Fifty-one thousand and six hundred companies in Britain provide low-carbon and environmental goods and services. Exports are now £11.3 billion, up 3.9%.

By Christmas we will have 3GW of biomass installed, and by Easter 5GW of onshore wind. In the past seven months alone, plans for £1.69 billion of investment and 9,500 jobs have been announced.

Here in the North West, more than 950 jobs: 340 at the Siemens Renewable Energy Engineering Centre, just a few miles down the road; up to 600 over the next decade at Cammell Laird; three new Farmgen developments planned in Cumbria, with hundreds of jobs.

This is the sharp reality of green growth. At a time when closures and cuts dominate the news cycle, next-generation industries are providing jobs just as in the recovery after the last deep depression in 1929 to 1931. It is new and innovative industries that grow fastest.

Renewable energy is surging out across the United Kingdom, blazing a trail of start-ups and jobs.

Across the Pennines, in Yorkshire, 2,250 jobs – £130 million in Real Ventures’ biomass plant, employing up to 285 people.

And in the North East, more than 1,400 jobs – TAG Energy Solutions, delivering up to 400 jobs in the Billingham turbine factory.

North of the border, one of the jewels in our renewable energy crown – £160 million of new investment and more than 420 Scottish jobs.

Across the Irish Sea, 450 jobs in Belfast Harbour thanks to DONG Energy’s Duddon Sands offshore wind farm; 1,400 jobs in Wales.

In the heart of England, 100 jobs in the East Midlands – and 50 in the West; 120 in East Anglia.

Two thousand and two hundred jobs in the South East, supported by £172m – from Vestas, the Green Home Company, and more. And at Tilbury, the first UK coal plant to convert completely to biomass, safeguarding livelihoods.

Across Britain, from the industrial heartlands to the northernmost extremities, new energy technologies are delivering jobs and growth just when we need them most.

Capitalising on our geographical, physical and human advantages; Scotland’s research and natural resources. The Solent’s marine expertise. Manufacturing in the North East. Technology development in the M4 corridor.

Renewable energy doesn’t just have the potential to bring Britain’s economy back to life – it has already started.

Our job now is to allow it to really flourish. How? By setting clear and coherent objectives. And using regulation and closely targeted support to hit them.

Targets

By the end of this decade, we must cut our carbon emissions by 34% on 1990 levels. By the end of the next decade, they must be halved.

To hit our EU renewable energy target, we must generate 30% of our electricity from renewables by 2020. That means a fourfold increase in deployment – turning our back on an inheritance that ranked us as the dunce in class, 25th out of 27 EU countries for renewables.

Growth on that kind of scale will not be easy. It will require tough decisions, clear thinking, and tightly focused support.

And everyone has a part to play.

Industry must carry on making the case for renewables. Engaging with communities – and answering its critics by delivering renewable schemes that save money and save carbon.

Government must break through the barriers that are stopping new schemes being built, overcoming the financial, planning and delivery hurdles that can hold up progress on renewables.

And together we must do a better job of communicating. That means engaging with the communities who stand to benefit, and the investors who don’t yet see the promise that renewable energy holds.

We must ensure the silent majority aren’t drowned out by the vocal minority – those opposed to renewable energy in all its forms.

That means making sure communities that host renewables benefit more directly. That’s what our proposals on business rate retention are for. And that’s why we were pleased to endorse Renewable UK’s Protocol on Community Benefits.

My challenge to you today is this: keep it up. Continue to develop and publicise new ways of rewarding those communities most affected by development.

Opportunities

Because, as the report you are publishing today shows, the opportunities are simply too great to ignore.

Globally, around half a trillion dollars has been earmarked for green stimulus spending. We will need to spend a hundred times that by 2050 to hit our climate targets.

We must be realistic. The pressure on the public finances means we cannot support everything at the level we otherwise would.

So we must ensure we send clear market signals: deploying public finance intelligently, and breaking through barriers to growth.

Our starting point is simple. We have a responsibility to the taxpayer to get the most carbon and cost-effective electricity generation online.

Review

That is why the Renewables Obligation Banding Review has studied carefully how much subsidy different technologies need.

The Renewables Obligation reinforces our commitment to renewables, and it provides what developers most need: a stable framework as we look ahead to the Electricity Market Reform.

Where new technologies desperately need help to reach the market – where they can be scaled up significantly while bringing down costs over time – we are raising support.

Where investors are on the cusp, we will give them the short-term impetus they need. So marine energy projects up to 30 megawatts will receive five ROCs under our plans.

Where market costs are coming down – in onshore wind, for example – we’re consulting on reducing the subsidy.

On offshore wind, we set our ambition high in our recent Renewable Energy Roadmap. And because we want to see a huge increase in deployment by 2020, we must see costs come down.

So we’re working to help to bring investors and developers together, for example through the offshore wind investor conference.

And our host today, Andrew Jamieson, is also lending his talents to the Offshore Wind Cost-Cutting Task Force, which met for the first time last week.

On biomass, our support will focus more strongly on cheaper transitional technologies. Conversion from coal to biomass, for example, exploits existing assets and helps build the supply chain.

Overall the new arrangements will mean a lower impact on consumer bills than staying with the current bandings.

In total, our low-carbon and energy-saving policies will reduce household enegy bills compared with a ‘do nothing policy’.

Of course, this is a consultation. We want to hear views from industry and beyond. I am sure you will not be backwards in coming forward.

Markets

Our approach to renewable energy must encourage investment and deliver value for money for consumers.

We are doing three things to help.

First, we are using policy to create new markets that will stimulate new investment – like the Green Deal, our unprecedented energy efficiency programme. It will bring jobs, growth and opportunities right across the country.

Or the world’s first Renewable Heat Incentive. It will create a whole new market in renewable heat. Not just big industrial and commercial installations, but also homes and businesses, too.

We expect green capital investment in heat to rise by £7.5 billion by 2020, supporting 150,000 manufacturing, supply chain and installer jobs.

So the first thing we’re doing is to create new markets; the second is to make existing markets work better.

This is why we published in the summer our plans for the reform of the electricity market, which will deliver secure, low-carbon and affordable electricity.

We’ve listened to the renewables industry in drawing up the reforms. That’s why we support a contract for difference model tailored to renewables and not auctioning in the near future.

We’ll publish a technical update on the institutional framework and the capacity mechanism around the turn of the year, and we’re planning to provide more information on the CfD too.

We’ll also build in a phased transition from the Renewables Obligation to the new arrangements.

By offering certainty and clarity, we can secure the scale of investment we need. And by attracting in new investors, we will also increase competition in the UK energy market.

Benefits

Our third priority is to capture the benefits of the low-carbon revolution. That means ensuring more clean technologies are designed and manufactured here.

We have a blossoming low-carbon goods and services sector, which seems to be thriving even in tough times.

But China leads the world in solar photovoltaic panel production; Germany on energy efficient housing design.

We’re missing a trick unless we start supporting low-carbon manufacturing here in Britain – and grow the green supply chain: locking in profits and expertise, and creating the exports that will keep Britain competitive.

Yes, climate change is a manmade disaster. Yes, the UK is only 2% of global carbon emissions. But if we grasp the opportunity now our businesses and economy can be much more than 2% of the solution.

We are not going to save our economy by turning our back on renewable energy.

This has been at the heart of Liberal Democrat policy for decades and it is something the Deputy Prime Minister, the Business Secretary, and the Chief Secretary to the Treasury instinctively understand.

But this goes beyond any one party. I know the Prime Minister agrees, which is why he is putting so much effort in to securing offshore wind manufacturing in the UK. And it is something I know my predecessor Ed Miliband understands.

It is this three-party consensus that makes the UK such a good place to invest.

It wasn’t always like that. It is nothing short of a national disgrace that in the 1980s the UK lost our leading wind research position to Denmark, because government refused to support the industry.

It is a mistake I am determined that this Coalition Government will not make again. That is why in the recent ROC banding consultation I have sent a clear signal to the tidal stream and wave industry – we want the UK to be the best place in the world to invest, deploy and commercialise these technologies.

So I can today assure you that this Government has resolved that we will be the largest market in Europe for offshore wind.

We already have more installed offshore wind than anywhere else in the world and we are determined to remain at the forefront.

That’s why we set aside £200 million for the development of low-carbon technologies, including £60m for supporting major new manufacturing projects on the English coast.

We will be the best place to invest in marine power, and we will be the fastest growing country in the EU when it comes to renewable deployment.

That’s why the Green Investment Bank has been capitalised with three billion pounds, to help unlock private sector investment at scale. For the first time ever, Britain will join every other leading developed economy in having a public development bank focused on key economic goals.

Research

And that’s why we’ll keep funding research and innovation – not just through DECC, but through the business and transport departments too.

We’re also funding the Offshore Wind Accelerator, a partnership between the Carbon Trust and leading developers to demonstrate a new generation of full-scale, low cost energy. I’m pleased to announce today that a project funded through the Accelerator has been has been successfully installed with a met mast by the SMart Wind consortium, with funding support from DONG Energy.

This kind of innovation will bring down the cost of offshore wind faster.

That’s why we’ve allocated up to £30 million over the next four years to fund innovation to reduce offshore wind costs. And as part of this work, our first call for proposals will focus on components of emerging offshore wind systems, with budget of up to £5m. I expect it to be launched shortly.

We’ve also allocated up to £20 million to support the world’s first commercial-scale marine energy arrays.

And we’re working closely with organisations such as the Energy Technologies Institute, which just announced plans to invest up to £25m in an offshore wind floating system demonstration project. Opening up new areas off the coast of the UK, and helping to bring generation costs down.

Non-financial

So from the structure of the electricity market to research funding, we’re breaking through the economic barriers. But we’re also focusing on non-financial obstacles.

We’re reforming the planning system, to ensure it’s no longer a brake on sustainable development.

The energy National Policy Statements set out the national need for new renewable energy infrastructure. We have introduced a fast-track process for consents. And we will close the Infrastructure Planning Commission and return decisions on major energy infrastructure to democratically elected ministers.

Over 1,000 pages of local planning policy for England are being replaced by clearer and more streamlined National Planning Policy Framework. And the Government will consult on measures for a ‘planning guarantee’.

We’re also working to improve grid connections. The connect and manage regime is now up and running. Network companies are now looking much further ahead in their planning and engaging more effectively with stakeholders. Together, this will help the network acts as a facilitator rather than an obstacle to renewable generation.

And a few months ago, we published the Renewables Roadmap – setting out for the first time how we will overcome barriers to deployment.

It’s a comprehensive action plan to accelerate the UK’s deployment and use of renewable energy.

Conclusion

In many ways, Britain can lay claim to be the home of renewable energy.

It is thought that the oldest tidal mill in the world once stood across the river Fleet, in London. The white cliffs of Dover looked over a tide mill that was recorded in the Domesday Book.

And 130 years ago, we connected the world’s first public electricity supply, in Godalming, Surrey.

It did not burn coal, or gas.

No, the power plant in question was a Siemens generator driven by 100% clean, renewable power: a watermill on the River Wey.

When Britain began its journey towards electrification, renewable energy was the future.

But we ended up choosing another path. This time, things will be different.

We will not heed the naysayers or the green economy deniers.

With over £200 billion worth of energy infrastructure needed by the end of the decade, this is our golden chance to deliver a greener future.

Turmoil over Feed in Tariff Rates Cuts for 2012

Businesses considering installing Solar PV are all rushing to install before March 2012, though for some even that may be too late.

At a meeting at the House of Commons today between industry representatives, the Government reiterated its position on the Comprehensive Feed in Tariff review.

Rachel Solomon-Williams, Head of the Feed-in Tariff Review confirmed today that the Comprehensive Review is underway in the Department of Energy and Climate Change (DECC), although she was unable to confirm details of when it would be revealed, or what the rates will look like.

It was however established that DECC has to operate within the Treasury-imposed, fixed envelope. It was made clear that if this budget overruns, the funding will need to come from DECC, for which, unfortunately, there is no budget.

She also reiterated that there are no planned changes before April 1, 2012 “unless earlier action is deemed necessary,”

And it is the fact that the Government consistently keep repeating that phrase at ever more frequent intervals that is causing major unease with potential customers.

After all, many still remember that phrase from the recent fast-track review, which ended in tariff rates as low as 8.5p for large scale projects, the concern is that all project over 10kWp could now also be affected and the rate drop  to a similar level.

Whilst the Government wouldn’t be pushed further, the chatter in the room and the corridors afterwards was that the most likely outcome was a 10% cut on the first band up to 4kWp, possibly the same up to 10kWp, a heavier reduction (and a new band) between 10kWp and 20kWp and a swingeing reduction for the 20kWp to 50Kwp sized systems. The chatter also suggested that the upper end of the cuts may be introduced as early as January 2012, in the same way that the Fast Track review effectively killed off all the projects over 50kWp, a rapid implementation of a >20kWp band would effectively kill off nearly all the commercial schemes currently under consideration, meaning that the only place left to install Solar PV was homes and small businesses.

Hence the rush to get systems installed before the end of this year.

Watch this space..

The Strategic Review of FITS – how quickly could it come into effect – 7th January 2012?

Content:

FITS Review
Fast Track Review
Modification to Extension of Plants

Based on extracts from DECC website:

FITs Review

On 7 February 2011, the Government announced the start of the first comprehensive review of the Feed-in tariffs (FITs) scheme for small-scale low-carbon electricity generation.

A principal objective of the review is determining how the efficiency of FITs will be improved to deliver  £40million of savings, around 10%, in 2014/15 as committed to in the 2010 Spending Review [External link]. This commitment reflects the need for a responsible approach to public subsidies like FITs, to ensure value for money for consumers. 

HM Treasury recently published a control framework for DECC levy-funded spending [External link] which includes the FITs Scheme. 

….

Comprehensive review

The comprehensive review is considering all aspects of the scheme including:

  • Tariff levels 
  • Degression rates and methods 
  • Eligible technologies 
  • Arrangements for exports 
  • Administrative and regulatory arrangements 
  • Interaction with other policies 
  • Accreditation and certification issues

We will consult on the comprehensive review later this year. The review will be completed by around the end of 2011, with tariffs remaining unchanged until April 2012 (unless the review indicates the need for greater urgency). 


Since then there has been very little from DECC or the ministers involved at all, apart from of course the fast track review that they conducted in March – June which effectively killed off all solar projects > 50kWp.

The only other information available officially from deck is the announcement of the above review, and the accompanying written statement, I’ve reproduced them in full below, you can see the originals here:

Huhne takes action on Solar farm threat (Press Release)

Feed-in Tariffs: Written Ministerial Statement by Chris Huhne


Huhne takes action on Solar farm threat

Press release: 11/010
7 February 2011

  • Comprehensive review of Feed-in Tariffs starts now to provide investment certainty.
  • Fast-track consideration to be launched into large-scale solar installations and farm-scale anaerobic digestion plants.

Energy Secretary Chris Huhne has today launched a comprehensive review of the Feed-in Tariffs (FITs) scheme following growing evidence that large scale solar farms could soak up money intended to help homes, communities and small businesses generate their own electricity.

Since FITs began last year it has been a huge success at stimulating green growth, driving innovation, creating jobs and cutting carbon.

More than 21,000 installations have been registered to date. The vast majority of these are domestic installations, including solar panels, wind turbines and microhydro plants.

Last year’s Spending Review committed government to save 10% of the costs of FITs in 2014-15 through a review due to start in 2012 or earlier if uptake exceeded Government expectations. Because of the risk of an increasing number of large scale solar farms which could push FITs costs off track, and the need to give industry added certainty to invest, the coalition is today announcing a comprehensive review into the scheme. We also hope to publish next month measures to support renewable heat within the budget agreed at Spending Review.

Chris Huhne said:

“The renewables industry is a vital piece in the green growth jigsaw and this review will provide long term certainty while making sure homes, communities and small firms are encouraged to produce their own green electricity.

“Large scale solar installations weren’t anticipated under the FITs scheme we inherited and I’m concerned this could mean that money meant for people who want to produce their own green electricity has the potential to be directed towards large scale commercial solar projects.”

The comprehensive FITs review will:

  • assess all aspects of the scheme including tariff levels, administration and eligibility of technologies
  • be completed by the end of the year, with tariffs remaining unchanged until April 2012 (unless the review reveals a need for greater urgency)
  • fast track consideration of large scale solar projects (over 50kW) with a view to making any resulting changes to tariffs as soon as practical, subject to consultation and Parliamentary scrutiny as required by the Energy Act 2008.

Alongside the fast track review of large scale solar PV, a short study in to the uptake of FITs for farm based Anaerobic Digestion (AD) plants will also take place. Only two such projects have been accredited so far and by this point at least six were expected. The tariff rates will be examined to see if they are enough to make farm based AD worthwhile.

The Government will not act retrospectively and any changes to generation tariffs implemented as a result of the review will only affect new entrants into the FITs scheme. Installations which are already accredited for FITs at the time will not be affected.


Notes for editors
  1. Broad terms of reference for the review are available from the First review of Feed-in Tariffs (FiTs) web page.
  2. According to Ofgem, the total installations to date (to 26 January 2011) under the FITs scheme are as follows:
  • Anaerobic digestion – 2
  • Hydro – 178
  • Micro CHP – 36
  • PV – 19854
  • Wind – 1132

The total installations have a combined capacity of 76.66MW.


Feed-in Tariffs: Written Ministerial Statement by Chris Huhne

7 February 2011

I am today announcing the start of the first review of the Feed in Tariffs (FITs) scheme for small scale low carbon electricity generation.

Decentralised renewables are vital to green growth and the FITs scheme has proved highly successful at stimulating growth, driving innovation, creating jobs and cutting carbon.

Since the scheme began last year more than 21,000 installations have registered to date. The vast majority of these are domestic installations, including solar panels, wind turbines and micro hydro installations. The scheme is working well. The take-up of solar photovoltaic (PV) panels under FITs has been a success with 20,000 installations now registered. However, there is room for improvement. I am concerned about the impact of super-size solar installations. I am also disappointed at the lack of farm based Anaerobic Digestion plants currently accessing FITs.

In light of the economic and fiscal situation, inherited by the Coalition, it is imperative that we take a more responsible and efficient approach to public subsidy, including where this subsidy is funded through energy bills. Specifically the Spending Review committed to improving the efficiency of FITs and finding £40million of savings, around 10%, in 2014/15.

Since the Spending Review, I have become increasingly concerned about the prospect of large scale solar PV projects under FITs, which was not fully anticipated in the original scheme and could, if left unchecked, take a disproportionate amount of available funding or even break the cap on total funding. Several large solar installations have already received planning permission. Industry projections indicate there could be many more in the planning system. In light of this uncertainty and the risk that such schemes could push FITs uptake off trajectory and may make the Spending Review savings difficult, I have decided to end the potential for damaging speculation and bring forward the review of the Scheme to look at ways of correcting these early teething problems.

I recognise that industry needs a long term plan for investment in which it can have full confidence. Today I am announcing a comprehensive evidence based review in to the FITs scheme and, to provide further certainty to the renewables industry, I can confirm that we also hope to publish next month measures to support renewable heat within the envelope agreed at Spending Review.

The FITs review will:

  • Assess all aspects of the scheme including tariff levels, administration and eligibility of technologies
  • Be completed by the end of the year, with tariffs remaining unchanged until April 2012 (unless the review reveals a need for greater urgency)
  • Fast-track consideration of large scale solar projects (over 50kW) with a view to making any resulting changes to tariffs as soon as practical, subject to consultation and Parliamentary scrutiny as required by the Energy Act 2008.

Alongside the fast track review of large scale solar PV, we will also undertake a short study into the take-up of FITs for farm based Anaerobic Digestion plants. Only two such projects have been accredited so far and by this point at least six were expected. We are looking again at the tariff rates inherited from the previous administration to see if they are enough to make farm based Anaerobic Digestion worthwhile.

Broad terms of reference for the review are available from the First review of Feed-in Tariffs web page and we are seeking views on specific issues to be considered. The Government will not act retrospectively and any changes to generation tariffs implemented as a result of the review will only affect new entrants into the FITs scheme. Installations which are already accredited for FITs at the time will not be affected.

 


Here’s what they did before:

Fast track review 

As part of the comprehensive review, we have given fast-track consideration to the tariffs for large-scale (over 50 kilowatts) and stand alone solar photovoltaic (PV) projects and farm-scale anaerobic digestion (AD) projects (up to and including 500 kilowatts). A consultation on the fast-track review was held over the period 18 March to 6 May 2011.

The outcome of this consultation was announced on 9 June 2011. This confirmed that, having carefully considered the responses received, the Coalition Government has decided to proceed with the proposed tariff reductions for large scale solar PV (over 50 kilowatts) and all stand-alone PV projects, and increases for farm-scale AD projects (up to and including 500 kilowatts). The detail of this decision and the analysis underpinning it are set out in Feed-in tariffs scheme: Summary of responses to the Fast Track Consultation and Government Response.

The new tariffs for large scale (over 50 kilowatts) and stand alone solar PV came into force on 1 August 2011. These new tariffs were introduced through:

Modifications to the Standard Conditions of Electricity Supply Licences

Timeline:

Announce – Publication = 39 days
Consult = 49 days
Prepare = 34 days
Before Parliament = 53 days

TOTAL: 175 days

Treatment of Extensions Change to Fits

Since announcing the outcome of the fast-track review, we became increasingly aware of evidence that some large-scale solar PV developers were intending to use provisions in the FITs legislation on the accreditation of extensions to installations, to take advantage of the current tariffs beyond 1 August 2011. This was not the intended effect of the extension rules and was clearly inconsistent with the objective of the fast-track review.

Therefore, a consultation on the treatment of extensions was held over the period 27 July to 31 August 2011. The outcome of this consultation was announced on 27 September 2011 and confirmed the decision to amend the rules on extensions. These amendments are being made through the Feed-in Tariffs (Specified Maximum Capacity and Functions) (Amendment No.3) Order 2011. This was laid in Parliament on 27 September 2011 and will come into force on 18 October 2011.

Timeline:

Consult = 35 days
Prepare = 27 days
Before Parliament = 21 days

TOTAL:  83 days

 


POSSIBLE TIMELINE:

Based on their previous track record, they will have already decided what they are doing and the ‘consultation exercise’ will be purely to go through the motions.

Consultation period: 40 days

At the end of that period it will be laid straight into parliament.

Before Parliament: 40 days

So if the Strategic review is published on the 19th October and they allow 40 days for consultation and 40 days before parliament that gives until the 7th January.

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