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‘Boom and bust must be avoided’
Urgent action is needed to put the solar industry on a steadier, clearer and sustainable growth path, avoid boom and bust and protect the wider Feed-in Tariff scheme (FITs), Greg Barker said today as he announced the reduced tariffs and new qualification criteria.

Opponents to the scheme argue that the move could stop the growth of the burgeoning solar market in its tracks.

The proposals, subject to consultation, would introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW.

Greg Barker said: “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year.”

The Department for Energy and Climate Change argued that if it took no action, by 2014-15 FITs for solar PV would be costing consumers £980 million a year, adding around £26 (2010 prices) to annual domestic electricity bills in 2020. “Our proposals will restrict FITs PV costs to between £250-280 million in 2014-15, reducing the impacts of FITs expenditure on PV on domestic electricity bills by around £23 (2010 prices) in 2020,” the Department said.

There were over 16,000 new solar PV installations in September alone – nearly double the number installed in June. And nearly three times as much solar PV as projected has so far been installed with over 100,000 separate installations with over 400MW of capacity.

The new proposed tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011. Furthermore, from 1 April 2012 a property would have to reach a certain level of energy efficiency to receive the proposed new tariff rates. This could include reaching an Energy Performance Certificate level of C or taking up all the measures potentially eligible for Green Deal finance.

There will also be a new multi-installation tariff rates for aggregated solar PV schemes, ie, where a single individual or organisation owns or receives FITs payments from more than one PV installation, located on different sites.

However, UK-GBC said the move will put many planned solar installations at risk and dent confidence in the Government’s commitment to low carbon growth. John Alker, director of policy and communications at the UK Green Building Council, said: “While the Feed-In Tariffs are starting to have the desired effect and reducing the cost of installing solar panels, the planned cuts to the FIT are a blow to the solar market. The depth of the proposed cut coupled with the speed with which this change will be rolled out means that many proposed solar schemes will be scrapped before they have even started. The success of the FITs scheme so far shows the potential for the UK to create green energy and green jobs – both of which could be jeopardised by [this] decision."