FITs and starts

DECC has announced an early review of FITs particularly targetting large-scale solar PV. The reasoning is that that there is evidence (DECC claim) that the budget for FITs could be swallowed by that one technology. (That budget, by the way, was set under the CSR at £900M from 10/11 to 13/14). DECC say that FITs were conceived to promote domestic- and community-scale installations, not large commercial ventures. So far the scheme has done just what was intended, the majority of the over 21k installations registered have been domestic.

The review process will begin with a formal consultation document that will be published in a couple of weeks. This will set out:

• A 'fast-track' review of the tariffs for 'large-scale' PV of over 50 kW and for farm-scale AD.
• A comprehensive review of the Feed-in Tariffs that will run until the end of 2011 and will result in changes in tariffs and scheme design to be implemented for April 2012.

It is clear that the hope is for changes to the tariff for large-scale solar from the fast-track review to be implemented by the time of the Parliamentary recess on 19 July 2011. Fast track indeed! Obviously, notwithstanding that the consultation and conclusions from it will be evidence based, DECC's expectation is that the fast track review will conclude that changes to tariffs are necessary to make large-scale solar projects much less attractive.

Installations generating and accredited for FITs will not be subject to retrospective changes. However, any projects in the pipeline as at the time of the changes will no longer be eligible for the tariff at the current rates.

Solar projects below 50 kW and all other technologies should be 'safe' from tariff changes until April 2012 - unless evidence reveals the need for greater urgency.

It is also becoming apparent that DECC is looking for  a more dynamic tariff-setting process to be one result of the longer-term review. 

This is all well and good - the desire not to have public funds being swallowed by commercial projects is understandable. However, moving the goal-posts so quickly is going to send negative messages into the market - investors hate uncertainty. It also has something of a whiff of technology picking which we know has been disasterous in the past.

We have to hope that whatever DECC concludes it does not scare the horses. The UK's ambitions for renewables growth are already in tatters and I can't see decarbonisation of the grid happening in the timescale that HMG wishes but that's not reason for stalling what green technology is being brought forward.