DECC Announce Phase Two of the UK Solar Industry for 2012

by Solar Selections on February 9, 2012

Today the Department of Energy and Climate Change announced the various policy changes that will affect the UK solar industry in 2012 and beyond. By and large the information has been received as better than expected, with EPC requirements not as high as was predicted and the 21p tariff rates ensured for installations following April 1st, 2012. This article will summarise the announcements and provide initial analysis on how it will affect the industry.

The DECC’s official release

The Solar Feed-in Tariff Rates

  • The 21p Tariff rate has been established for all installations registered after March 3rd, 2012. The full list of rates for systems larger than 4kWp can be found here. These rates will be implemented on a cost control mechanism that steps the tariff levels down as the market prices adjust.
  • Beginning from July 1st 2012, the tariff will step from 21p to 16.5p, 15.7p or 13.6p, depending on installation figures reported in March and April 2012:
    <150mW = 16.5p
    150mW to 200mW = 15.7p
    >200mW = 13.6p
  • In October 2012, the rates will reduce a further 5% from there and the automatic cost control mechanism will come into play.
  • From October 2012, the automatic baseline transgression will involve a 5% reduction every 6 months. The step down can be triggered earlier than the six month review should deployment of solar PV exceed pre-determined levels. These levels remain as yet undisclosed and the DECC may review this policy annually to ensure it is proportionally adjusting to the UK market.
  • The Feed-in Tariff will be paid for a duration of 20 years for all installations from April 1st, 2012. This is a 5 year reduction from the current schemes length.

Energy Performance Certificate Ratings

Households looking to install solar and receive the full tariff rates will need a minimum EPC of rating ‘D’. The DECC estimate that half of all properties in the UK already qualify for this rating, however assessments would need to be carried out to verify this on a case by case basis. EPC assessments are being valued between £200-  £300 from accredited sources.

Community and Multi-Installation Tariff Rates

An individual or organisation owning multiple properties may install solar PV and gain the full tariff rates for up to 25 properties. After the 25th property, any further installations will be eligible for 80% of the respective feed-in tariffs. The DECC is consulting upon unique approaches to community projects, social housing and distributed energy schemes and more will be revealed on this in the coming days.

Summary

The 21p tariff rate is a welcome sight, with many in the industry fearing a lower rate would be brought in after April. However the July reduction to 13.6p or 16.5p does mean a limited time will be available for consumers to lock the rate in. From July, 5% reductions in October and every sequential six months will see rates fall at much slower rates but the initial feedback is that a reduction to 13.6p as soon as July 2012 would be difficult for the market to keep up with.

The ECP ratings were expected to be operating on a ‘C’ minimum, so again the ‘D’ rating is an improvement. How exclusive a rating ‘D’ is remains to be seen but many in the industry fear even the Departments ‘half of all properties’ estimate cuts out too a large proportion of the population. Again, not the worst news but tentative growth is surely becoming the motto for the industry from this announcement.

The community and multi-installation tariff rates are positive news. Pockets of solar communities under 25 in number can be established across the UK under the full tariff rates and that is far better than restricting the rates for these individuals and organisations. The economies of scale work best in volume though and in respect of previous figures a 25 figure limit does promote growth, but in a far more gradual and sensitive way.

Overall the industry has not been harpooned in the way many feared. Gradual solar uptake will continue and a good deal of certainty has been established for all in the industry. It is in the long term interests of the UK solar industry to maintain a responsible, market based and transparent system of incentives. Everything about this announcement indicates that these priorities have been considered. Whilst the rates and step downs are certainly not promoting mass uptake and roll-outs; the responsible and diligent have the opportunity now to flourish and provide their customers with attractive rates of return and savings from solar investments for years to come.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: 020 7205 2267

© 2012 Solar Selections Ltd

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{ 2 comments… read them below or add one }

Barbara Grieve March 30, 2012 at 5:37 pm

My 15 Solar Panels were installed on July 18th, 2011 generating 3.27 kWp. My understanding was that the FIT rates would be paid at the rate in force at that time, for 25 years from the installation date i.e. Feed-in Generation Tariff 43.30p/kWh and 3.10p/kWh for exporting energy. Am I correct, or are both tariffs set to reduce on April 1st, 2012? Alternatively is it set to reduce only for new installations installed after that date? I’d welcome further clarification from you as none of the websites I have looked at make this differentiation clear. Many thanks in anticipation.

Reply

admin April 2, 2012 at 2:31 pm

Dear Mrs Grieve,
Your FiT rate is locked in for 25 years and will not reduce on April 1st 2012. The new rates apply to all systems with an eligibility date after April 1st 2012. Your eligibility date is the date that your system is officially registered with the respective Distribution Network Operator (DNO) and this occurs in the days after your systems installation. Your rate is locked in and will not be dropped. In addition, the export tariff was not reduced on April 1st 2012 and remains 3pence per kWh. The new generation rate is 21p per kWh and will remain this way until July 1st 2012 when they will be another drop as outlined above.
Best regards,
Jarrah
Solar Selections

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