I have started to hear rumours that the FIT at the present rates may come to an end before the end of March 2012. This is due to the rising cost of electricity bills, the realisation that the electorate are waking up to the fact that some of this rise is due to the increase they see in the number of PV arrays, and the fact that the return on capital on those arrays is the best available in the UK today. Anyone else heard any rumours?

I am aware that in the past 24 hours many of you have received information that FIT is under an imminent fast track review and may be cut to as low as 9 pence across the board. The BPVA Board of Directors and I have been in contact with DECC officials to clarify this and we have been re-assured behind reasonable doubt that these are unsubstantiated rumours. I am sure that you agree firstly, this kind of news at this crucial time has a negative impact on the whole industry, it is counter productive and also may give ideas to DECC!?

BPVA chairman email yesterday.



decc reply, a bit none committal actually, but doesn't say anything like 'all options are on the table' which would have been the type of wording they'd have used if they were seriously considering ending it.


Our position hasn’t changed. All tariffs in the scheme are being considered in the Comprehensive Review and we will be consulting on proposals later this year. We’ve made clear that tariffs will remain unchanged until April 2012 unless the review indicates the need for greater urgency.

The FITs scheme is paid for by energy consumers through their bills and has a fixed budget. The scheme is proving popular with households and we’re continually monitoring the take up of the scheme to make sure that we stick to budget.

Sorry we can’t provide more detail that that at the moment.

Posted By: Gavin_A The scheme is proving popular with households and we’re continually monitoring the take up of the scheme to make sure that we stick to budget.

That was the reason given for cutting farm scale PV.

There are a few reasons why the FiT spend is considered part of the government budget.

DECC control the rates and the scheme is administered via OFGEM and the EU have sanctioned it under state aid rules. These all bring it within the government spending review. HM Treasury also have specific controls over what DECC can and can't do. Explained here -
http://hm-treasury.gov.uk/d/control_framework_decc250311.pdf

The announced budget figures for FiTs were in the DECC fast track review consultation document -
http://www.decc.gov.uk/assets/decc/Consultations/fits-review/fits-fast-track-government-response---final.pdf - bottom of page 4.

These are the figures that DECC are referring to when they talk about take up above expectation/budget.

The total spend allowed for 2011/12 is £80 million and £161 million for 2012/13.

Actual FiTs payments were £10 million in just Q1 of 2011/12. But there have been significant levels of PV installs since then, including most of the solar farms that did manage to get built before the fast-track review tariff change deadline.

Posted By: tedThe total spend allowed for 2011/12 is £80 million and £161 million for 2012/13.

Actual FiTs payments were £10 million in just Q1 of 2011/12. But there have been significant levels of PV installs since then, including most of the solar farms that did manage to get built before the fast-track review tariff change deadline.

hmm...

taking that £10million qt 1 figure, and extrapolating it into the latest monthly figures given in the article at the link below, I think we probably are heading for an early cut.

There was roughly double the installed capacity in qt 2 to qt 1 - 250MWp vs 140 MWp at the mid point of the quarters, so it'd be a reasonable assumption that the FIT spend in qt2 would be around £18-20 million. So that's £28-30 million for the first half of the year, and £36-40 million already built in for the second half of the year, leaving only £10-14 million for new installed capacity in the 2nd half of the year... but everyone knows there's going to be a big rush before the FIT rates are due to change in April, so there looks to be no possible way that the FIT scheme can stay within it's pitiful £80million a year limit this year without some fairly rapid and drastic action.

I'd not be surprised if this decision get's taken out of DECCs hands and the treasury force the issue if I'm anywhere close on my figures, as the treasury has reserved the right to intervene since the Comprehensive spending review that first set the limits.

http://www.solarpowerportal.co.uk/news/industry_fears_mount_in_the_lead_up_to_the_comprehensive_fit_review_5478/

utter incompetence on DECCs part to have allowed it to get to this stage despite the signs of this impending issue have been pretty obvious since the CSR a year ago, and certaintly since the fast track review when a significant proportion of the responses were from installers calling for rapid across the board cuts of 20-30% in the FIT rate rather than simply slashing the rate for large scale installations.

All slashing that rate did was move most of the finance that would have gone to the big installations into the rent your roof domestic sector to further overheat it.

Not sure if I can post this..

And retrospective action is not the way to get new market participants and investments.

For anyone other than government it's called breach of contract.

Rgds

Damon

I seem to remember that they have a clause that allows them to change the terms at any time. More an own goal for the RE industry than the government as the government has changed flavour. But it is all speculation at the moment.

Posted By: Phil.Chaddah-DukeYes, we were going to invest a new system in next months and everyone said that the rate is fixed for 25 years, there is no way the government can change it, it would be breach of contract! The worst case would be that in Apri or maybe before it seems that the rate would be reduced for new installs. Is the feeling that they really would go as far as reducing existing systems rates not just for new ones, it seems a massive own goal in terms of encouraging green investment, no-one will ever trust such schemes again :-(

I really can't see them changing the rate for existing systems. They'd destroy all credibility and trust for all their renewables support across the board, so FIT, RHI and ROC would all be dead in the water, as would the career of the minister in charge etc.

Posted By: Phil.Chaddah-DukeCan someone please confirm these potential cuts would only effect new registrations to the scheme, I assume there is no talk of cutting the FIT payment rates for existing installations?

I've heard various DECC officials and ministers speaking a number of times, and all of them have assured the audience that they won't be cutting FIT payment rates for existing installations, so my feeling is that's pretty safe.

Posted By: pmusgroveThis is due to the rising cost of electricity bills, the realisation that the electorate are waking up to the fact that some of this rise is due to the increase they see in the number of PV arrays, and the fact that the return on capital on those arrays is the best available in the UK today. Anyone else heard any rumours?

While the return on capital is one aspect of what's driving the change, it's not all. As Ted says, there's now a budget for the feed-in tariff, set in the government's spending plan. If it overspends, DECC has to cough up the difference, and there's no slack in it's budget. A steady degression in the rate has always been planned as the market gears up and economies of scale come in, with the aim that eventually it doesn't need subsidy.

As originally set out, the FiT was intended to give 6-8% ROI. Due to the significant falls in the price of panels people are getting much, much more than that, so it's been known for a long time that there's going to be a fairly significant reduction from 1 April 2012. However, now rumours are circulating that the comprehensive review might 'deem it urgent' and slash the rate before April. It's difficult to know how much credibility to give to this, but the expectation was that 86MW of PV would be installed under the FiT in the year to 31 March 2012. By the end of September 316MW had been installed. That's quite a significant difference!

The RH PP £15m will not be fully allocated unless there is a significant and unexpected uptake.

Would DECC be minded to try and re-allocate to the FiT fund?

The renewable heat industry has struggled ever since FiT was launched as most householders considering a 'green makeover' would naturally favour solar PV.

It would be an enormous kick in the teeth but nothing would no surprise me.

What is crystal clear is that DECC is far more worried about upsetting the Treasury than the renewables industry.

Any body else heard any whisperings of a gov. statement tomorrow outlining the reduction in FIT to take place end December & the rate to be cut by 50% post then.

Don't know how much truth there is in it but the reason why the tariff is being cut by so much so soon is because the cost of the equipment has fallen considerably. And yet, those installing PV are not passing on these reductions to the customer and are making a fortune.

Our prices, and the prices of the vast majority of our competitors have dropped by maybe 30% in the last year, and our margins per job have if anything slightly decreased, but we've also had a big increase in our cost base in terms of training up and employing new installation and admin staff, warehouse, office, equipment etc needed to just meet the rapidly increasing demand.

I've no problem with the rate being cut though, in fact I support it, and along with around 30% of respondents to the fast track review, before the summer suggested they needed to apply an across the board cut of 20-30% in September or January instead of just slashing the rates for the over 50kW stuff.

The reason DECC might be being forced to consider a big cut by the treasury is entirely due to them ignoring this advice, meaning the market's overheated massively, far more installations have been done than they anticipated, and they're almost certainly going to breach the treasury imposed spending limit of £80 million for the year. Their decision to slash the rates for large installations has mostly only had the effect of ensuring the majority of that money has been switched to rent your roof schemes instead due to the massively high returns DECC left in place for the under 50KW systems when they killed off the top end.

Just seen an article on Channel 4 news tonight giving a pretty strong hint that in the next couple of days an announcement will be made on FIT'S by DECC confirming a heavy reduction on SOLAR PV, wind seems to be a bit "wooly" at the moment..........I,m sure we'll all know by Monday !!!!!!! Typical government......lead everyone up the garden path and then shut the gate.....remember HCR's.....lots of people changed careers,spent £10k on training and then the government (Labour in this case) made the HCR's optional,not mandatory.....end of new career !!!!!!! Cheers everyone.