In a response to the Fast Track Review on Feed-in Tariffs (FITs), published on 9 June 2011, the Government has maintained its view that tariffs will be cut for large scale solar energy production.
The review was launched in response to the view that large scale photovoltanic (PV) schemes would be in large demand and installed much quicker than originally anticipated. As the 2010 Spending Review called for a saving of in the region of £40 million to be made to the FITs Scheme in the years 2014 to 2015, the fear was that these large scale PV schemes would threaten the ability to make such savings, with the smaller schemes losing out.
Following the review and the responses received from some 500 bodies, the Government has confirmed that tariffs for large scale solar PV installations should be 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). The intention is that these rates will apply for all installations with an eligibility date on or after 1 August 2011 and there will be no transitional arrangements put in place.
In addition to the changes for solar PV installations, the Government has also recognised a need to increase the role of energy derived from Anaerobic Digestion (AD) projects. AD projects are coming on line at a rate much slower than originally anticipated and therefore the Fast Track Review has concluded that AD tariffs should be increased to 14p p/kWh for up to 250kW total installed capacity and 13p p/kWh for the band 250 to 500kW.
It is hoped that changes to tariffs for AD projects will take effect on 1 August but as it is anticipated that the European Commission will scrutinise this increase under the State Aid Regulations, there may well be a delay. As such the Tariffs are set to apply on 1 August 2011 or the date on which the State Aid approval is granted, whichever is the later.
It should be noted that with regards to both changes, they will not take effect retrospectively and therefore will only affect new entrants merging into the FIT Scheme after 1 August 2011.
The next step to the Scheme will be for a comprehensive review to be launched this summer with any resulting changes to take place with effect from 1 April 2012. Once again, it is clear that any amendments to the tariffs will not be applied retrospectively.
The proposed changes have been met with some anger and it is felt in some quarters that the review did not take into account the responses to the consultation process. It should also be noted that the House of Lords Merits Committee has drawn the proposals flowing from the Fast Track Review to the special attention of the House (click here for more details).
This will enable the Lords to call for a debate or even vote on the issue. The Merits Committee, chaired by Lord Goodlad, is to consider a letter co-signed by some 58 organisations and businesses including the Solar Trade Association, the Co-Operative and the Town and County Planning Association, all calling for a rethink of the Government’s plan to reduce the tariffs barely a year after the FIT Scheme was introduced.
As ever with this area of law, it really does seem to be a case of watch this space.
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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