The government has rocked the UK's renewables industry by proposing to cut the level of feed-in tariff (FIT) for new large-scale solar electricity schemes from August 2011. The change will put paid to plans by many factories, farms, and other businesses that are looking to turn a large roof area into a profitable power station by installing solar photovoltaic (PV) panels. In announcing the move on 18 March 2011, Climate Change Minister Greg Barker said the proposals aimed "to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FITs scheme was never designed to be a profit generator for big business and financiers."
Climate Change minister Greg Barker: wants emphasis to be on small-scale solar electricity
The cuts will affect schemes accredited after 1 August, and installations of over 50 kilowatt (kW) capacity. Domestic household schemes are typically around 2.5kW capacity, and will not be affected. However, the changes are a blow to investors eyeing up roof spaces to fit large arrays of solar panels to bring in attractive rates of return. For example, schemes of 50-150 kW will now receive FITs of only 19 pence per kilowatt hour (kWh) instead of the 32.9 p/kWh currently offered; and schemes of more than 250 kW capacity face a cut of over 70% in the subsidy, to a mere 8.5 p/kWh.
However, Barker did also announce a modest increase in subsidy for farm-scale anaerobic digestion, to boost take-up of this renewable technology.
Threat to community solar projects
The move has put a damper on various projects, including plans for farm-scale solar parks in the southwest, companies looking to install solar PV , and certain community solar schemes. For example, Transition Town Lewes is now set the challenging target of installing and registering the UK's first community-owned solar power station by the August deadline, if it is to benefit from the current FITS. It needs to raise another £125,000 by 9 May to meet its goal, and offer a 4% return for investors.
FITs review underway
A comprehensive review of the FITs scheme is underway, to find ways savings of around 10% by 2014-15. The government claims that current tariffs will remain unchanged as planned until April 2012, "unless the review reveals a need for greater urgency".