The Department of Energy and Climate Change has just published (31 October 2011) a consultation paper which proposes substantial reductions in the feed in tariffs for solar PV installations. If the proposals in the consultation document are adopted it will mean a 50% reduction in tariffs for installations of up to 50KW capacity. The revised tariffs for pv will take effect from 1 April 2012, but will apply to all new pv installations with an eligibility date of on or after 12 December 2011.
In order to be eligible for the existing tariffs an installation must be commissioned and have its request for accreditation received before 12 December 2011. It is important to note that the eligibility date will often follow the installation date. Therefore, if there is any delay in receiving the necessary accreditation after the completion of the installation prior to the proposed eligibility date, this could mean that a scheme will still be subject to the reduced tariff. Due to the time involved in obtaining consents any installation requiring planning permission is therefore also caught by the December cut off date.
The current consultation ends on 23 December 2011 and it remains to be seen to what extent the proposals are adopted as drafted. Already, the relevant trade associations have expressed great concerns at the impact that the proposals will have on the solar pv industry and in particular the impact on jobs which the industry has generated.
The government cites the reduction in the price of solar panels (around 30%) as part of the justification for the proposed review of tariffs but the net effect of the proposed changes will reduce returns to around 5% rather than the 10% figures which have given rise to the greater uptake in solar pv.
It is our view that the impact of this further review of the tariffs will only serve to undermine investor confidence and is likely to bring a halt to any new solar pv installations at least until the outcome of the consultation is known. We will closely monitor the consultation process and provide an update on our website of the changes when known and their impact on the viability of future installations.
If you wish to discuss the implications of the proposed changes to the tariff please contact Andrew Barr on 01234 362926 or email ahb@robinsonsandhall.co.uk