UK Government Proposes Cut to Feed-in Tariff for Solar PV

Scotland
Available languages: EN

At a time when more and more organisations are looking for advice on installing renewable energy technologies, the UK Government is proposing to change the Feed-In Tariff (FIT) rates for solar PV installations.  This is hot on the heels of the cuts made to FIT rates in August for solar PV installations with an installed capacity of 50kW or greater.

Summary of the Proposed Changes:

Square FIT rate reduction:  With the exception of installations with an installed capacity of 250kW or greater, the Government proposes to cut the FIT rates available for solar PV installations which become eligible on or after 12 December 2011.  The changes are proposed to take effect from 1 April 2012 and, in some cases, the reduction from current rates will be greater than 50%.
Square Multi-installation tariff:  Where there is eligibility for FIT payments from solar PV installations being installed at more than one site the Government proposes to introduce a multi-installation FIT rate to take account of the opportunity for organisations to benefit from economies of scale.  The multi-installation rate will be set at 80% of the standard rate and will apply to new installations that are part of an aggregated scheme and become eligible on or after 1 April 2012.
Square Energy efficiency standards:  Where solar PV installations which become eligible on or after 1 April 2012 are to be attached to, or wired to provide electricity to, a building, that building will have to meet energy efficiency standards in order for the installation to be eligible for the standard FIT rate.  The actual standards to be met are still to be confirmed but, if the standards are not met, the level of FIT payment available will be 9p/kWh.

What does this mean?

Although the levels of FIT payments are likely to be cut, the supporting evidence for the consultation suggests that the capital costs of installing solar PV technologies have decreased in the last year.  The FIT scheme was originally designed to provide a 5% rate of return for solar PV so, with the cuts in the FIT payments appearing to coincide with reductions in the capital costs, the incentives may still make installing solar PV technology financially attractive. 

Other renewable technologies also benefit from incentives and, from our experience in advising on renewable energy strategies for various organisations, we are able to offer tailored advice on what renewable energy opportunities and associated incentives are available.

The following table sets out a summary of the changes to the FIT rate for solar PV:


Current FIT Rate
Current Published FIT Rate from 1 April 2012 Proposed new FIT Rate
from 1 April 2012
≤4 kW (retrofit) 43.3p per kWh 39.6p per kWh 21p per kWh
≤4 kW (new build) 37.8p per kWh 34.6p per kWh 21p per kWh
4-10 kW 37.8p per kWh 34.6p per kWh 16.8p per kWh
10-50kW 32.9p per kWh 30.1p per kWh  15.2p per kWh
50-150kW 19p per kWh 17.4p per kWh 12.9p per kWh
150-250kW 15p per kWh  13.7p per kWh 12.9p per kWh
250kW - 5MW 8.5p per kWh 8.5p per kWh 8.5p per kWh
Stand-Alone (up to 5MW) 8.5p per kWh 8.5p per kWh   8.5p per kWh