Feed-in Tariff next for Government cuts
Feed-in tariffs that boost solar panel schemes could be the next green subsidy to be axed, according to a new government consultation published today. The Department for Energy and Climate Change has begun a public consultation on feed-in tariffs (FITs), due to “projected overspend” on the scheme and partly because it is required to review subsidy schemes every three years by the European Commission.
The scheme allows households to claim money from energy suppliers if they generate their own electricity through renewable sources, most popularly used through solar panels, but also through wind turbines.
Under the scheme, households receive a set ‘generation tariff’ for the electricity they generate, and also an ‘export tariff’ for any extra units of energy they don’t use, currently set at 4.77p per unit of electricity.
The department says that should it consider that the scheme is unaffordable following the consultation, it will propose ending generation tariffs to new applicants “as soon as legislatively possible”, which could be January next year.
DECC has proposed limiting the scheme to a “maximum affordable budget” of between £75m and £100m, as part of “the government’s desire to set a clear pathway to a subsidy-free world for the technologies supported under FITs.”
The consultation document states: “This consultation sets out proposals for a fundamental review of the FITs, intended in the short term to control scheme costs effectively.”
DECC says the proposals it has put forward would put the scheme “onto a more sustainable footing which provides consumers and industry clarity on levels of small-scale renewable electricity support until 2018-19.”
Among the options being considered that could “build on or replace FITs” are continuing FITs as an export tariff-only scheme, removing the ability of new installations under the scheme to extend their capacity, and capping installations under the scheme to 12,000.
Originally posted by Building.com 28.08.15
Even though the cost of fitting PV to a homes roof, maximising the low rate FiTs under 3.8Kw has dropped from around £15,000 in 2007 to £4500 in 2015, for many home owners, the news that FITs may well be cut entirely could well prove the nail in the coffin when the decision whether or not to invest in PV is being made. For developers, the attractions are still obvious, with PV the easiest and probably most cost effective way to demonstrate carbon savings in commercial and residential developments. Therefore, this announcement will not prove too much of a concern. For PV investors looking to make decent returns, this may well lead to a rethink.
In a broader context, has the government decided that Climate Chnage does not exist? There don’t seem to be many policies or initiatives that the conservatives have not cancelled or watered down, giving us little or no fighting chance of reducing our CO2 emissions and achieve the national short term CO2 emissions targets of 29% reduction by 2017 and 50% by 2025 below 1990 levels.
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