Government Tells Its Side Of The Feed In Tariff Story
Author: David Thomas
Published: Wednesday, 22 February 2012
The Government’s Energy Minister, Greg Barker’s written response to Caroline Lucas claims the DECC (Department of Energy and Climate Change) estimated that appealing the feed in tariffs would save consumers £1.5bn.
Solar boom despite the feed in tariffs confusion
The Government has not been very forthcoming over the past few months while the feed in tariffs (FITs) have been in dispute. It has released the odd statement but some would say it has kept the waters just muddy enough to deter people from switching to solar PV power.
Green MP Caroline Lucas has been vocal in her support of the solar industry, writing of the 100,00+ solar PV systems that have been installed since the FITs scheme was announced, the creation of 22,000 jobs and the starting up of 4,000 new businesses.
Her argument is that the solar industry is what the UK needs in terms of green technology, job creation and improvements to infrastructure.
(While most industry figures would agree with her some may have other opinions about the 4,000 solar companies who have appeared, warning he public to beware of opportunists with no expertise taking their cash and doing a shoddy job.)
“We respectfully disagree with the decision of the Court of Appeal, and intend to seek to appeal to the Supreme Court against the ruling…”
In a nutshell Greg Barker’s letter explains that using their appeals to reduce the number of installations in February and March has saved UK consumers £100m per year, which translates to £1.5bn over the next 25 years.
Here is an excerpt from his letter. Greg Barker writes that:
“It is very difficult to estimate by how much the installation rate might have increased, since this involves assumptions about demand for PV at the higher tariffs and the ability of the market to respond…
We based our estimate on the observed increase in installation rate in the six weeks between the launch of the consultation on tariffs for solar PV on October 31 and the proposed reference date of December 12, which saw 292 megawatt (MW) (over 74,000 installations) more PV installed than in the previous six-week period.
"Conservatively, we assumed that there might be an additional 200 MW installed in February and March if the higher tariffs had remained available. Assuming the deployment was split between tariff bands in a similar ratio as earlier deployment (with around 75 per cent (of 50 kW capacity being in the 0-4 kW band), this would have led to additional costs to consumers of approximately £100 million per annum, or £1.5 billion in real, discounted terms over the tariff lifetime."
At present the tariff rate you can expect to qualify for is 21pkW, which still allows a highly profitable return on investment of up to 10%, tax-free and index-linked.
Solar PV panels have a 30 year life expectancy (should be at least 25 and some say as high as 50 years) and the initial installation costs are £5k - £10k.
From April only households with at least an EPC (Energy Performance Certificate) of D will be eligible for the feed in tariffs. This is not a hurdle: at present most UK households hold this EPC rating but to be sure you can check with your council.
Keep your eye on The Eco Experts Blog for more updates on solar PV.