Solar PV – Feed In Tariff (FIT)

DECC’s announced changes to the FIT’s scheme on May 24th 2012, which became effective on 1st of August 2012. Some tariff changes took place on the 1^st of November 2012.

Changes to FIT from the 1^st of May:

•   Start date for new tariffs May 1^st
•   Tariff changes:
  • Tariffs being reduced due to the automatic degression: >50kW- 5MW and stand alone systems. Please see table below for changes.
  • Export tariff  increases for all generation tariffs from  4.5p to 4.64 p/kWh
  • All tariffs for 0-50 kWp generation tariffs remain unchanged at: 15.44p ( ≤4kW), 13.99 (>4-10kW) and 13.03 (>10-50kW)
  •  Multiple generation tariff remains at 90% of single installation tariff
  •  Lifetime of FITs  remains at 20 years

Tariff degression mechanism explained:

Set future tariff alterations depending on uptake over the preceding three months

•  No tariff cuts if prior quarter is less than deployment threshold: 0-10kwp50kwp < 50MW
•  First deployment trigger above these levels will be 3.5% (approx 0.5p); greater cuts if deployment is higher
• Tariff cuts (if any) will take place each quarter (next on the 1st Aug).  Announced at least 2 months in advance
• If deployment falls below the minimum trigger an automatic 3.5% reduction will be applied every 9 months

A comparison of old and new tariffs are set out in the table below :

Notes

• If the energy efficiency requirement is not met, installations receive the stand-alone tariff
• The ‘multi-installation’ tariff is 90% of the tariffs above               
• Tariffs last 20 years and are adjusted annually by the retail price index (RPI)

*1.6ROC’s available from April 2013 which at 6.5-7p offers similar returns to the investor.

Future FIT changes  – these will take place based on deployment rates.  These deployment rates are broken in to three separate degression bands : domestic 0-10kW, small commercial 10-50kW, large commercial 50kW to 5MW.  The degression mechanism will operate independently for each degression band.

The table below shows the degression % for each tariff point for a maximum deployment in a  3-month period (MW):

Put in words, the table shows the following:

1. No degression will take place if installs are within 100MW, 50MW, 50MW for the 0-10kW, 10-50kW, >50kW bands over a 3-month period. Note – degression can only be skipped for two successive degression periods, so there will be a minimum 3.5% every 9 months.
2. A 3.5% degression will take place if installs are within 200MW, 100MW, 100MW for the 0-10kW, 10-50kW, >50kW bands over a 3-month period.
3. A 7% degression will take place if installs are within 250MW, 150MW, 150MW for the 0-10kW, 10-50kW, >50kW bands over a 3-month period.
4. A 14% degression will take place if installs are within 300MW, 200MW, 200MW for the 0-10kW, 10-50kW, >50kW bands over a 3-month period.
5. A 28% degression will take place if installs are greater than 300MW, 200MW, 200MW for the 0-10kW, 10-50kW, >50kW bands over a 3-month period.

Example of degression mechanism

The following examples illustrate how the degression mechanism might operate for a hypothetical set of deployment figures:

• If in November 2012, DECC published deployment statistics showing that between 1 August and 31 October 2012, there was 195MW of 0-10kW PV capacity, the new tariffs from the 1^st February for that band would be 3.5% lower.  If the tariff  from November 2012 had been 16p, the tariff from 1^st February would become 15.44p.
• Similarly, if in November 2012, there was 45MW of 10-50kW PV capacity, the new tariffs from 1^st February would not change i.e. if it was 13.5p, it would remain 13.5p.

Please click here to see a summary degression calendar

For a full list of proposals set out in the consultation and more information on Feed In Tariffs, please see the link on the DECC website

FIT scheme – Government response to Consultation on Comprehensive Review Phase 2A: Solar PV cost control – 24 May 2012

Impact Assessment: FIT scheme – Government response to consultation on FIT’s Comprehensive Review Phase 2A: Solar PV Tariffs and cost control – 24 May 2012

FIT Review Important update from DECC (Phase 1 consultation): 19 January 2012

Press release from Climate Change and Energy Minister Greg Barker : 31^st October 2011

FIT – General Feed in Tariff information from DECC

Registered FIT licensed suppliers - confirmed list of FIT licensees from Ofgem

Solar Thermal – Renewable Heat Incentive (RHI) and Renewable Heat Premium Payment (RHPP)

Support for non-domestic solar thermal installations

The RHI is a tariff scheme payable to non-domestic energy users generating their own renewable heat. A range of technologies are supported including solar thermal.

The RHI came in to force at the end of November 2011. Solar thermal installations receive 8.5p per kWh generated for installations up to 200kWth for a 20 year period. Conditions apply, please see Ofgem RHI Guidance.

Support for domestic solar thermal installations

DECC plans to make further changes to the RHI scheme in ‘phase 2’ which will include households. DECC published its domestic RHI consultation consultation with a planned implementation date of the domestic RHI in April 2014. Domestic solar thermal systems installed from 2009 will be eligible to receive the RHI once this is launched in 2014.

As an interim measure to support domestic renewable heat, the Energy Savings Trust (EST) has been offering a one off Renewable Heat Premium Payment (RHPP) of £300 for commissioned solar thermal installations dated between 21^st July 2011 and 31^st March 2012.

DECC announced the RHPP grants available to household installing solar thermal systems would be doubled to £600. Householders will require undertaking a Green Deal assessment before consumer can receive their RHPP grants. Green Deal Assessment cost typically £100 for a domestic property. A list of accredited green deal assessor can be accessed here. The RHPP higher rate grant (£600) voucher is available for application made to the EST from 20th of May 2013 to the 31st of March 2014.

Please refer to the EST for RHPP eligibility and application. For more additional information, please see the links below.

Press release – link to DECC’s 10^th March 2011

DECC RHI update

Ofgem RHI Guidance

What is the RHI - link to EST website

What is the RHPP - link to EST website

Application form for RHPP – link to EST website