Following detailed consultation with industry and consumers in which Myriad and many others voiced their concerns about counter-productive changes to FiTS, the Government is introducing a range of changes to the scheme with effect from 1st August to provide better value for money. This will allow businesses and householders to plan with confidence. The improved scheme will recognise the increasingly significant place Solar PV can now have in renewable electricity generation.
The tariff for a small domestic solar installation will be 16p per kilowatt hour, down from 21p, and will be set to decrease on a 3 month basis thereafter, with pauses if the market slows down. All tariffs will continue to be index-linked in line with the Retail Price Index (RPI) and the export tariff will be increased from 3.2p to 4.5p.
The new tariffs should give a return on investment (ROI) of over 6% for most typical, well-sited installations, and up to 8% for the larger bands.
What changes will there be?
Tariffs for Solar PV installations to be reduced from 1st August: Tariffs for larger installations are to be reduced to reflect cost reductions but with most tariff cuts lower than proposed in February. Reductions to apply for new installations from 1st August, instead of 1st July as previously proposed, in recognition of low uptake from April and providing time for industry to adapt.
Multi-installation tariff increased to 90% of standard tariff: Organisations with more than 25 Solar PV installations will get 90% of the standard applicable tariff, increased from 80%, reflecting new evidence on costs involved for these projects.
Reduction in tariffs over time in line with uptake of FiTs scheme:
- Ensuring solar PV is not over subsidised.
- Average tariff reductions of 3.5% every 3 months, these reductions will be bigger (up to 28%) if there is rapid uptake.
- Tariff cuts will be skipped (for up to 2 quarters) if uptake is low.
- Uptake in 3 different bands (domestic (size 0-10kW), small commercial (10-50kW) and large commercial (above 50kW and standalone installations) will determine the quarterly reductions within those bands.
Increase in export tariff from 3.2p to 4.5p/kWh: This is designed to better reflect the real value of electricity exported to the grid.
RPI index-linking of generation tariffs to be retained: This move reflects the high value investors place on this element of the FiTs scheme.
Scheme lifetime reduced from 25 to 20 years for new solar installations: The Government aims to reduce the lifetime costs of the scheme and bring solar in line with most other technologies supported under FiTs.
Tariffs for installations which do not meet the energy efficiency requirements will mirror the tariffs for standalone installations: Ensuring energy efficiency is still encouraged as these tariffs are reduced.