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Feed In Tariff Review 2011

In March 2011 the government launched its fast track review on the feed-in tariff scheme. Once the review is complete the resulting changes are thought to be taking effect in July of the same year. Writing this prior to the final results of the review it appears that it will be installations over 50kW that are going to see their tariff rates cut.

The FIT scheme was originally set up in order to promote, encourage and incentivise green, low carbon renewable energy production. This is particularly so for small scale schemes specifically targeted at household level. The idea was to encourage homeowners to install technologies such as solar photovoltaic panels on their south facing roofs and so reduce householders demand on fossil fuel based electricity.

Why the review has taken place

The government are concerned that funds will be drawn away from the small house level and community level schemes. There was concern that rich landlords, investors and foreign companies would set up large scale solar farms in the UK in order to profit from the high tariff levels.

It appears that the government is going to cut the tariff levels for installations over 50kW. The new proposed rates below show that in some cases the tariff rates will drop dramatically. The new rates will not affect existing installations which will continue to receive the older higher rates.

Proposed new feed-in tariff rates

  • over 50kW to 150kW 19p/kWh
  • over 150 kW to 250kW 15p/kWh
  • over 250kW to 5MW 8.5p/kWh

Previous feed-in tariff rates

  • over 10kW to 100kW 31.4p/kWh
  • over 100kW to 5MW 29.3p/kWh

The reason the feed-in tariff replaced the old solar panel grants

Previous to the tariff the government provided solar panel grants to help towards the cost of installing solar. These grants however were untargeted and with solar photovoltaic systems still being very expensive only the well off could afford them, even with the grants.

The idea of the new type of tariff is that it would make the funding a more efficient way of encouraging the appropriate use of PV solar. Rather than providing a lump sum payment you would now get paid for all the renewable electricity that you produced. The idea is that it would encourage solar to be installed in parts of the country that had the most sunshine.

As the new tariffs are paid over a much longer 25 year period and the payments are much more generous it would encourage people on lower incomes to be able to take advantage of the scheme. The idea was that you could afford to take out a loan, pay back the loan over 25 years and still make a profit.

Solar farms versus free solar panels

One of the unexpected results of such a generous tariff for individual home sized solar installations was that it made it financially viable for companies to offer free solar to householders. The homeowner would get free electricity whilst the company claimed the FIT payments.

feed-in tariff review 2011 Additionally it has meant that social and private rented housing could also get solar installed where it would not have previously financially viable. In my view this is what the government scheme should be all about, providing free electricity to those that really need it and would benefit the most from.

Companies providing free solar panels could provide free installations to local authority and private housing tenants. In a round about way this provides a government scheme that actually works, which brings me to the point of solar farms. Large solar farms built of green field sites funded by people with money is not what the government wanted. Sure the fact that renewable energy is being produced is great but the money is going to people who shouldn't be benefiting from this scheme.

In haste the government decided to cut the rate for these larger scale projects. This in my view was wrong, what they should have done was vetted schemes on an individual basis. Stop the money men from setting up solar farms but allow community projects to go ahead.

The sort of big community schemes the government will now discourage are the sort where a local community could create their own local solar installation to provide power for local homes. Instead the government have not only made these sorts of scheme untenable but also discouraged any sort of large scale scheme whether it would be socially beneficial or not. For this I am just glad I have never voted for big government, maybe that's the reason my local MP never replies to my letters.

This brings me to my final point. You could argue that the companies offering free solar panels are in a round about way creating larger than 50kW installations albeit in a piece meal way. Is the government going to stop these schemes as well. Of course not (at least I hope not) because these schemes are providing free electricity to people that need it, those that cannot afford to install solar themselves. Not everyone can get the large loan needed to be able to afford their own installation Mr Prime Minister.

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