I know that the uncertainty while we await the court's decision is difficult for the industry
19 Jan 2012
Following calls from the industry for the government to clarify the level of incentive available for current installations, Climate Change Minister Greg Barker this afternoon tabled a Written Ministerial Statement in parliament detailing the government's plans.
"We continue to stand by our original proposal," he said, referring to the plan to halve solar incentives for installations completed after December 12 last year. "However, I know that the uncertainty while we await the court's decision is difficult for the industry."
He added that to tackle this uncertainty and limit risks to the scheme's budget in the event that the government's appeal proves unsuccessful and the court orders a return to the previous feed-in tariff level of 43p/kWh, the government will lay draft licence modifications before parliament that would allow tariffs to be cut from April 1 for all installations completed on or after March 3.
The licence modifications confirm that from March 3 installations with less than 4kW of capacity will see incentives halved to 21p/kWh, while large installations with between 50kW and 250kW of capacity will see feed-in tariff payments cut to 12.9p/kWh. Mid-sized installations with 4-10kW will see tariffs cut from 37.8p to 16.8p/kWh, while installations with 10-50kW capacity will face a cut in the level of support from 32.9p to 15.2p/kWh.
The statement also reiterates the government's intention to stixk with its original proposals if it wins its appeal, imposing cuts to incentives for all installations completed after December 12 last year.
"If the court finds in favour of the government's appeal, we intend to stand by all our consultation proposals, including an earlier (December) reference date, subject to the Parliamentary procedure and consideration of consultation responses," Barker said.
"It is very important that we reserve this as an option because these 43p payments will take a disproportionate share of the budget available for small-scale low-carbon technologies. We want instead to maximise the number of installations that are possible within the available budget rather than use available subsidy to pay a higher tariff to a smaller number of installations."
In addition the statement indicates that the government might not meet its stated goal of delivering its response to the consultation and its wider proposals to reform the feed-in tariff scheme before the end of the month, suggesting that the documents may not be published until next month.
"The consultation closed on 23 December 2011 and over 2,000 consultation responses were received which we have been analysing carefully," Barker said. "We are intending to announce the outcome of the consultation by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012. Our aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation."
He added that the government's latest intervention "gives the industry as much certainty as is possible" given the on-going legal action.
He also reiterated that ministers remain committed to reducing solar incentives "as quickly as possible, to protect consumer bills and to avoid bust in the whole Feed-in Tariff budget".
Friends of the Earth's executive director Andy Atkins welcomed the move, predicting the statement will "sort out some of the uncertainty that's crippling a thriving UK industry".
However, he reiterated calls for the government to rethink its approach to solar feed-in tariffs and raise the spending cap for the scheme.
"Solar payments should be cut in line with falling costs, but by trying to rush through payment before the consultation closed ministers created a shambolic mess that threatens 30,000 jobs and the future of the industry," he said. "Ministers must urgently use the millions of pounds in tax that solar firms generate to safeguard this industry and the jobs and businesses it has created."
His comments were echoed by Seb Berry, head of public affairs at Solarcentury, who urged the government to reconsider the spending cap for the feed-in tariff scheme.
"The Government is taking an important step today to restore some certainty to the PV market in the short-term, but it is no more than that," he said. "The elephant in the room for all FIT technologies, not just PV, remains the Government's decision to impose an unrealistic cap on the FIT scheme in 2010. Until that fundamental issue is addressed by the "greenest Government ever" what we have today is no more than a temporary albeit welcome step forwards."
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