Two weeks ago the Department for Energy and Climate Change announced a Review of Feed-in Tariffs ( FITs) in an attempt to address growing fears that the incentive mechanism is being dominated by large solar farm developers, cutting the availability of funds for smaller scale ’rooftop’ installations.
Claims have subsequently been made that the government’s fast-track review of FITs, to be completed by the end of 2012, is undermining investor confidence in the sector. Industry leaders have voiced concerns that the review will cover any installations with more than 50kw of capacity.
Shirley Mathieson, renewables spokesperson for Saffery Champness, says: "After months of uncertainty, the announcement of the dates at least provides some confidence that FIT rates will not fall until next April unless the review reveals a need for urgent implementation of a reduction and this seems unlikely.
"The downside is that FIT rates may fall and incentives to install renewable energy will be reduced. However a fall-off in rates is not altogether a bad thing and a review was always thought necessary. The Department of Energy and Climate Change has stated that one of the requirements of the review is to deal with the problem of large scale solar installations taking a larger than expected amount of the cash available, while many feel that support for solar PV heavily outweighs that which is provided for wind turbines.
"It seems clear that the review will recommend a reduction in FIT rates because the government’s comprehensive spending review last year set out a plan to reduce the cost of the scheme. Indeed, Treasury chief, Danny Alexander, has recently stated that the Government’s intention is to provide energy efficiency savings of up to 20 per cent by 2014-2015. The uncertainty surrounding the scheme, and the Government’s overall support for green measures, has damaged confidence in renewable energy investment and reduced incentives.
"However, the review may well recommend only moderate cuts, and it will rectify perceived unbalances and give enough warning of changes in incentives. If so, the UK renewables industry may think itself fortunate as far as FIT levels are concerned. A lot still remains to be seen" says Shirley Mathieson.
