Reforms add extra month to benefit from higher feed-in tariff rates
Changes to solar subsidies give landlords more time
The housing sector has cautiously welcomed reforms to solar subsidies which last week ended the long-standing uncertainty surrounding photovoltaic panels.
On Thursday climate change minister Greg Barker announced that the feed-in tariff - an incentive paid to producers of renewable electricity - would be cut from 21p/kilowatt hour to 16.8p/kWh on 1 August rather than 1 July as it had indicated previously.
The move means landlords have an additional month to install PV at the higher FIT rate.
Under the new regime, the FIT will decline by an average of 3.5 per cent every three months, depending on the level of installations in the previous month, to reflect the falling cost of PV. There will be no cut if less than 200 megawatts is installed.
The life of the FIT has been reduced from 25 to 20 years, and the 2020 installation forecast was cut back from 22 gigawatts to 11.9GW.
Mr Barker also revealed that multiple PV installations, which were previously expected to receive only 80 per cent of the FIT, will now be able to receive 90 per cent of the FIT.
Although landlords still hope they will be able to receive 100 per cent of the FIT as proposed in a second consultation on a community tariff which would benefit social housing schemes to be published in July, the changes were broadly well received.
Pippa Read, policy leader at the National Housing Federation, said: ‘While the new regulations do provide more certainty, they still do not recognise the social housing business model, where the electricity goes free to the tenant to help cut fuel bills and reduce fuel poverty.’
Alex Grayson, managing partner at solar scheme developer Empower Community, said: ‘After 1 August we are cautiously optimistic we will be able to continue our offer. Prima facie it looks like we are still in business.’
Empower Community has now revived a ‘free PV’ scheme with York Council which is taking advantage of the extra month at the higher tariff and attempting to install PV on up to 780 homes by 1 August.
The model, in which landlords get free PV and the FIT is shared between a community fund and investors, has now been made viable again after Empower Community found new institutional backers to replace an investor, which pulled its £175 million commitment in November last year.
Mr Grayson said he is now in talks with new institutional investors to make the ‘free PV’ model work after August at the lower FIT rate.
current feed-in tariff
the FIT rate from 1 August 2012
frequency with which the FIT will decrease
6 per cent
return investors should see
90 per cent
proportion of the FIT social housing schemes will receive
the government’s installation forecast for 2020