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FiTs review creates “massive uncertainty” for solar farms

Greenwise Staff
7th February 2011
The Government’s decision to launch a review of the Feed-in Tariffs (FiTs) will cause "massive uncertainty" for larger solar photovoltaic (PV) farms, the industry warned today.
Energy Secretary Chris Huhne today said he was launching a "comprehensive review" of the FiT scheme following growing evidence that large-scale solar farms were putting at risk small-scale renewable projects, such as those found at homes and small businesses, which the scheme was intended for. He said the review would create "investment certainty".

However, the Renewable Energy Association (REA), which represents over 150 PV companies in the UK, disagreed, claiming it would create investment uncertainty for developments of over 50 kilowatts (kW) and risked undermining job creation in the sector and leaving the UK behind the rest of Europe.

"Many investors stand to lose out," said REA chief executive Gaynor Hartnell. "I fear this announcement reflects the generally poor levels of ambition for PV in the UK and will adversely affect our ability to attract much needed future investment in other low carbon technologies."

Reasons for review
Following the Comprehensive Spending Review last year, the Government has to save 10 per cent of the costs of FITs in 2014-15 through a review due to start in 2012 or earlier if uptake exceeds Government expectations.

The FiT incentive scheme was introduced in April 2010 to kick-start renewable energy generation in the UK. The £400 million a year incentive scheme guarantees an inflation-linked income for on-site renewable electricity projects under five megawatts (MW) in size for a period of up to 25 years. The attractive rates have led to a number of companies setting up to develop solar projects based on roof and land space across the UK. The Government is now concerned that these solar developments risk distorting the market, taking money away from other, smaller-scale renewable energy projects.

"Large scale solar installations weren’t anticipated under the FITs scheme we inherited and I’m concerned this could mean that money meant for people who want to produce their own green electricity has the potential to be directed towards large scale commercial solar projects," said Huhne.

According to Ofgem figures, total installations to date under the FITs scheme has seen 19854 PV installations, more than 10 times those of wind projects (1132), and far ahead of hydro (178), micro combined heat and power (36) and anaerobic digestion (two).

Scope of review
According to the Government, the FITs review will look at everything from the tariff levels available under the scheme through to eligibility of technologies.

The Department of Energy and Climate Change (DECC) said it would conduct a "fast track review" of large-scale solar PV farms, but will not act retrospectively on installations already accredited for the FiTs. It also agreed in principle that the tariffs would remain unchanged until April 2012, but it would not rule out changes sooner if "greater urgency" were required.

REA raised concerns that changes to the scheme could put at risk employment growth in the sector. Its own research suggests the PV industry will create 17,000 new jobs during this year and since the start of the scheme.  

"This announcement will inevitably undermine prospect for employment growth," said Hartnell. "DECC must develop a bigger vision for what this technology can deliver, as the UK is falling far behind other major EU countries on its ambition levels."

However, not everyone in the renewable energy industry agrees. 

Kevin Parslow, ceo of small wind company Evance Wind, said: "Planning applications for industrial solar farms need to come to a halt."

Juliet Davenport, ceo of renewable energy provider, Good Energy,  said the review represented "a crucial window of opportunity to build a revamped FiT system, creating long term certainty for all consumers and investors."

Anaerobic digestion study
Because the uptake of FITs for farm-based AD plants had so far been so low, DECC said it would also take the review period to conduct a short study to find out what was holding this part of the industry back.

REA, which also represents the biogas and AD, said that despite its concerns about the main review, it welcomed the study into farm-scale biogas plants.

"The announcement by Government that it is reviewing the levels of FIT for farm AD is hugely welcomed," said REA’s Biogas adviser David Collins. "This sector has a vital role in meeting renewables targets and reducing emissions – and an expansion in biogas plants will contribute to farm profitability, job creation and the local community."

DECC said today it also aimed to publish measures for the Renewable Heat Incentive by next month. 

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