High Court judgment could permanently kill off FiTs
The Electrical Contractors’ Association (ECA) warns that if the Government loses its appeal on reductions to feed-in tariffs, it could be the end for solar PV tariffs.
Paul Reeve, ECA Head of Environment (pictured) says: “Faced with the scenarios in front of us, we do not want the Government to lose its appeal. If it loses, it could be the end of FITs. This is because there will be a second industry and consumer dash until 3 March to install small scale PV equipment, to earn FITs at over 43p/kwh before the Government can bring down the shutters.
“Regardless of whether the Government wins or loses, a second run on FITs will clean out any remaining cash for domestic PV, throwing the whole industry from feeding time to famine in a period of weeks. Faced with this option, we'd greatly prefer that the industry, which is already adjusting its business models to accommodate lower FITs at around 21p, has predictable and longer term support from Government.”
Furthermore, the ECA says that the Government’s unsuccessful High Court appeal to the recent ruling on solar PV feed-in tariffs could mean a wild ride for an industry that is already reeling from Government announcements in the last few months.
Reeve added: “Before anyone celebrates, we should remember that future funding for FITs is not unlimited. Some of the available cash could now be used up in a second ‘rush to install’ before 3 March, when FITs will be halved to 21p/kWh. The first ‘rush to install’ took place up to 12 December to beat the Government’s initial deadline for halving FITs. That resulted in far more PV installations than DECC planned, which are now claiming FITs for 25 years at the previous high tariff. A second rush now could put even more pressure on future FITs.”
Reeve states that the latest development could actually undermine many solar contractors who have built-up PV installation businesses in the last 18 months, if the planned phasing down of FITs over the next few years is not properly funded.
According to Reeve: “The Government must learn from the quite foreseeable mistakes it made when it hastily announced cuts in FITs before industry consultation was even completed. It needs to engage in proper dialogue with the PV sector, which has delivered the domestic and commercial PV installation, and green jobs, that DECC said it wanted from the outset. However, even with FITs at 21p/kwh from March, the rate of return on solar PV is expected to be around 8%, tax free, and the cost of PV is dropping fast. This makes PV a potentially attractive option for many installers and customers – but the Government must provide a predictable business environment for the UK PV industry.”
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