Wind and solar power chiefs have denounced the UK government decision to
scrap feed-in tariff subsidies – and with no plans to replace them – as
being a hammer-blow to the industry and ‘not FiT for purpose’.
Solar industry advocates had hoped there would be a replacement for the
scheme, but a newly-launched government consultation launched has made it
clear there will be no extension or new alternative to the tariff when FiT
is axed in Spring 2019.
The Feed-in Tariff was established in 2010 and provides payments to
owners of small-scale renewable generators at a fixed rate per unit of
electricity produced, ensuring that the cost of installation is recouped
over the lifetime of the generator.
As the cost of renewables has plummeted over the past eight years, this
fixed rate payment has fallen by up to 90%.
The 2015 Feed-in Tariff review set out that the current FiT scheme would
close in April 2019. The Government committed to setting out its policy on
post-2019 support for small-scale renewables over a year ago but this has
been repeatedly delayed, causing huge uncertainty for companies in the sector.
Consequently, anyone installing solar after April will no longer even be
paid for exporting their excess solar electricity to local power grids.
The only financial benefit to people fitting solar at home will be if they
consume the electricity themselves and reduce their energy bills. A typical
solar installation costs around £6,000, less than half what it did when the
FIT started.
A BEIS spokesman explained: “As costs continue to fall and deployment
without direct subsidy becomes increasingly possible for parts of the
sector, it is right that government acts to ensure continued value for
money for billpayers over the longer term.”
Key aspects of the proposals put forward by BEIS – which the Solar Trade
Association says must be crystallised urgently – are;
Maintaining the export payments for surplus power exported to the grid for
householders and businesses, in line with the recently published EU Directive;
A replacement enforcement mechanism for the maintenance of high industry
standards, which have been delivered through the Microgeneration
Certification Scheme;
The role of aggregators for the services ‘smart’ solar homes can provide, and
The removal of tax anomalies, which now present major distortions to the
market for subsidy free solar.
Chris Hewett
Chris Hewett, chief executive of the STA said: “Feed-In Tariffs have
enabled around 800,000 households and 28,000 businesses to generate their
own clean solar power to date, transforming the future of energy in the UK,
and last week 10% of all UK electricity was generated by solar.
“This would simply not have happened without the Feed-in-Tariff. The good
news, as we look beyond FITs, is that solar is coming of age and while
solar always makes great environmental sense it now makes economic sense
for most investors without public subsidies given fair treatment by
government. An average domestic solar system cost £12,000 in 2010. It is
more like £5,000 today.
“The bad news is that government has been crystal clear on what policy
measures will stop – including even very basic rights to fair export
payments – but they are frighteningly vague on what comes next.
“There is real dismay that there is now a serious and needless policy gap
between the end of FITs and the start of the new regime.
“We therefore ask the government to work with us and with the industry as
a matter of urgency to fill that gap and ensure a smooth transition next March.
For domestic solar, the price of a substantial 4kW installation has fallen
from around £12,000 in 2010 to around £5,000 today, with even lower prices
where local authorities run bulk purchasing schemes. Solar will continue to
make economic sense to households with high levels of self-consumption,
which can also be maximised through the installation of battery storage.
However, the STA is looking for new policies to boost the domestic market
such as through Green Mortgages and the expansion of interest free loans,
which are currently available in Scotland, across the UK.
Industrial and Commercial – Rooftop Solar – level tax playing fields needed
The STA said that this market has effectively operated without subsidy
since 2016.
However, the market was further damaged by the imposition of unexpected and
sharp business rate rises on self-owned rooftop solar in April 2017.
The STA has been asking the UK Treasury to exempt rooftop solar cells and
panels from business rates to level the playing field with on-site gas, as
well as to grant enhanced capital allowances to solar PV. Industry players
believe these changes would bring on a significant amount of investment in
this market.
Barriers on domestic metering need to be resolved and markets for local
flexibility have not yet developed in the UK – meaning that ‘smart’ homes
and offices are not yet able to offer and monetise their services. Neither
are innovative energy suppliers able to offer meaningful Time of Use Tariffs.
However, alongside its decision to dump FiT, the Department for Business,
Energy and Industrial Strategy has also published a call for evidence on
potential new policies for small-scale renewables.
Renewable UK also expressed disappointment at the decision to end the FiT
subsidy scheme with no plans to replace it.
A spokesman said: “This is a major blow to small-scale renewables. The
government has known the FiT would be closing for three years and the fact
that they are only now beginning the conversation about new policies is far
too little, far too late for many companies.
“Small-scale renewable energies are a vital part of creating a more local,
smart power networks that will be central to the UK future energy system.”
“Companies in the renewables sector have helped tens of thousands of homes
and businesses to cut their energy costs, and have grown into a thriving
industry that exports around the world.”
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