Feed-in Tariff

This week has seen further important developments around the Feed-in Tariff (FIT), as the government tries to provide some much needed certainty around the scheme’s future.

First, the  Department of Energy and Climate Change (DECC) confirmed that  it  won't drop tariff rates below 21p/kWh of electricity generated for domestic solar PV systems installed between 12th December 2011 and 31st March 2012.

The Department then published an update and a ministerial statement on Thursday which lays out the government’s  planned  rates for solar PV, depending on whether their court appeal is successful or not.

So what does this all mean?

What we do know…..
Plan A – Government wins the court appeal
If DECC wins the court appeal the original FIT ‘deadline’ of 12th December will stand (Assuming that  Friends of the Earth do not appeal further), meaning that anyone registering a domestic solar PV installation after this date but before 1st April 2012 will receive the new lower FIT rate of 21p/kWh from 1st April. Between 12th December and 1st April they will continue to receive 43.3p/kWh.

Plan B – Government loses the court appeal
If DECC loses the court appeal and the 12th December date is settled as being unlawful, a new date of 3rd March will come into effect instead. Anyone who registers a project before the 3rd March should receive the higher FIT rate of 43.3p/kWh for 25 years.  However, anyone who registers their system on or after the 3rd March (but before 1st April) will only receive 43.3p/kWh for one month, and then move onto the new rate of 21p/kWh after the 1st April.

What we still don’t know….
Whilst this provides some clarity for projects due for completion in the next couple of months, what remains unclear is what happens to installations registered on or after 1st April 2012. DECC has confirmed that this is still dependent on the outcome of the court case, which is now expected either next week or the week after. We are also waiting for more information on its plans for an energy efficiency standard for new installations registered on or after 1st April.

It’s worth noting that for changes to come in effect by the 1st April the government must introduce legislation to Parliament by 9th February.

Nevertheless, this week’s developments are to be welcomed. However, as Good Energy’s Ed Gill wrote recently, real progress would be for the government to set out a long term future for FIT that recognises that it’s the best vehicle we have for delivering the decentralised energy market we need. This has to include a new structure that takes into account the popularity of a scheme that allows people, households and businesses to have greater control of their energy bills. It has to avoid introducing emergency consultations and measures like the proposed energy efficiency standard. This would give certainty to the industry, and deliver the kind of changes we need to fix the energy system in this country.

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