The curtain fell on a solar windfall boom arising out of a race by developers to complete large scale developments before 1st August, when the Government’s slashed feed-in tariff rates came into force.
Many large-scale photovoltanic (PV) developers saw the chance to exploit a technical loophole in the Feed in Tariffs (FITs) legislation, which could allow extensions to sites registered before 1st August to still receive the higher feed-in tariff rates for any additional capacity that is added.
As a result and despite the Government launching a consultation last week aimed at amending the rules on how extensions are treated, almost 20 250kW-plus installations were deployed in June. And with a closing date for consultation responses of 31st August, which means it’s unlikely that any changes to the rules will be imposed before mid-September, developers who beat the deadline should continue to receive the higher tariff rate for at least a few weeks to come. With the deadline passed, of course, investment in new large-scale schemes is likely to now come to a total stand-still.
In a response to a Fast Track Review on FITs, the Government announced new tariffs for large scale solar and anaerobic digestion (AD) projects under its solar incentives scheme in June this year.
The proposed changes were met with anger. From the outset, industry leaders feared that the new levels would make all solar installations with over 50kW of capacity financially unviable and hundreds of thousands of pounds of investment could be lost as a result, with no compensation option available. Critics also predicted the dramatic u-turn in the scheme, revised barely one year on from its introduction, would knock investor confidence and stifle stable growth of the industry.
Opposition strengthened when Government maintained its proposal to slash the tariffs for large scale developments following the Fast Track Review. It was felt that responses from over 500 bodies to the consultation process were not adequately taken into account. This led to the House of Lords Merits Committee drawing the Government’s proposals to the special attention of the House, calling for a review. It won unanimous support from Lords and the issue will now go through to the Commons.
The renewable associations are also making an attempt to rescue larger solar installations by campaigning for support under the Renewable Obligation (RO). The RO Banding review, which will set out the support levels to be offered to different renewable power technologies under the 2013 Renewables Obligation Order, is expected to be published this week and, among others, the Solar Trade Association is hoping it can be used instead of FITs to secure major UK solar opportunities. As ever with this area of law, it really does seem to be a case of watch this space.
Tariffs for large scale solar PV installations were reduced to 19p p/kWh for the band of less than 50 to 150kW total installed capacity, 15p p/kWh for 150 to 250kW, and 8.5p p/kWh for 250kW to 5mW (and stand alone installations).
Tariffs for AD projects were also due to change from 1st August, increasing to 14p p/kWh for up to 250kW total installed capacity and 13p p/kWh for the band 250 to 500kW. However, this has been delayed after the Government failed to secure state aid approval from the European Commission in time.
Written by Michelle Craven, a Director in the Nelsons' Commerce and Technology group. To find out more about our Commerce and Technology group, click here.
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