Energy blog

Summary of the DECC proposals announced yesterday, 24 May:

Tariffs for solar pv installations to be reduced from 1 August

• 16p/kWh for household scale solar pv installations to reflect fall in cost of the technology, delivering a return of about 6% for a typical installation.
• Tariffs for larger installations also to be reduced to reflect cost reductions but with most tariff cuts lower than proposed in February.
• Reductions to apply to new installations from 1 August, instead of 1 July as proposed, in recognition of low uptake from 1 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, 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 export tariff from 3.2p to 4.5p/kWh

• To better reflect the real value of electricity exported to the grid.

RPI index-linking of generation tariffs to be retained

• Reflecting the high value investors place on this element of the FITs scheme.

Scheme lifetime reduced from 25 to 20 years for new solar installations

• Reducing 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 tariffs are reduced. 

The new Tariff table:

Generation tariffs for new solar PV installations from 1 August 2012