FITs and starts and restarts

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Posted by:
Erin Karsten
Head of UK Renewable Energy Solutions 

Last month’s announcement of a first comprehensive review of the Feed-in Tariff (FITs) scheme and last week’s launch of the ‘call for consultation’ process are very much a predictable consequence of the arrival of the coalition government, its commitment to drastic budgetary control and, more directly, of October’s Spending Review. The review and consultation will hopefully bring to an end the speculation surrounding the future of renewable energy incentives in the UK.

With a target of £40 million in savings by 2014/2015, significant changes to the scheme are inevitable and a more responsible approach to public subsidy is understandable – clearly there are no blank cheques for FITs.  However in fast-tracking urgent issues, tackling the actuality of savings and endeavouring to provide the industry with some certainty, the net effect of the review is that the solar and renewable energy markets have come to a screeching halt, with investors reluctant to revive investment until the results of the consultation are known.

While the government aims are laudable and the intent to make renewables accessible to everyone should be addressed, we must remember that a significant share of the UK’s overall energy consumption and the major contributors to greenhouse gases are commercial buildings. If we want to see a significant impact in carbon reduction we need an incentive scheme that is reasonably attractive to investors. Without the feed-in tariff, solar and other technologies are just not financially viable to install, which is the reason why the tariffs were created.

It remains to be seen how investors will react to the proposed tariff changes. The consultation process will end on 6 May and, subject to responses, the new finalised scheme and tariffs will take effect from 1 August 2011 – we will then see. If you want to have your say on the fast-track review of the Feed-in Tariffs, click here to read more.

As a more positive footnote, there is encouraging news for renewables as a whole. Earlier this month the government announced that the Renewable Heat Incentive (RHI) scheme covering a variety of technologies would be launched in July 2011. (Further updates on both FITs and RHI when we have more detail from the DECC).

Click here for a detailed Executive Summary of the Feed-in Tariff Consultation and the Future of Renewables in the UK

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