Next FIT cut postponed until 1st July 2013

Edited to add : This article was based on the mistaken assumption that a quarter of a year was 3 months, unfortunately DECC seem to think that a quarter can also be 2 months, so the next FIT cut is actually scheduled for 1st July and not 1st August as we had originally stated.

 

Leeds Solar's analysis of the latest weekly solar PV installation statistics released by DECC clearly demonstrates that there is no possibility that the quarterly installed capacity will reach the cut off threshold needed to trigger a Feed In Tariff cut on 1st May.

Unless the industry is able to install as much capacity in the next week in the snow as we've installed in the last 12 weeks, which seems a tad optimistic.

This means that the Feed In Tariff will definitely stay unchanged until 1st August July.

Feed In Tariff band 0-4 KWp 4-50 kWp
Quarterly solar PV installation capacity required before 3.5% FIT reduction 100,000 kWp 50,000 kWp
New solar PV capacity registered this quarter (so far) 48,447 kWp 13,344 kWp
Capacity needing to be installed in 10 days in the snow before the end of January for a 3.5% FIT cut to happen 51,554 kWp 36,657 kWp

 

 

 

 

 

Minimum 3.5% Feed In Tariff cut scheduled for August 1st 2013

Due to the rule that states that there can be no more than 9 months without a FIT cut before there is an automatic Feed In Tariff cut of 3.5%, we can now say with certainty that the next FIT cut will be a minimum 3.5% cut across the board from 1st August 2013.

 

6 months of certainty for the solar industry, and excellent returns for our customers.

Leeds Solar welcomes the 6 months of certainty this now brings the solar industry to allow us to get back to what we do best, and hopefully get the message across to the public that:-

  • Installation prices have more than halved since 2011 so many more people should be able to afford solar PV now.
  • Electricity prices have risen by 10-15% since 2011, and are set to rise by 15-20% by winter 2013-14.
  • Rates of return on investment for high daytime energy users are as high as they have ever been, and are still tax free and inflation linked.
  • Commercial installations for high energy users making use of the new £250,000 capital tax allowance can now have as low as 4-5 years payback, and 15-20% IRR.

 

Let's make 2013 the year the solar industry bounced back.

The urgency of the challenge of climate change is too important not to.

 


 

notes

The official quarterly Feed In Tariff figures will not be released until mid February 2013, but it's virtually impossible for the industry to install the same amount of solar PV this week in the snow as it's installed in the last 12 weeks, so we're confident to call this now without waiting for official confirmation.

Electricity price rises of 15-20% at least before the winter of 2013 are now virtually guaranteed as the majority of the coal plants scheduled to close in 2016 have actually used up all their remaining hours in 2012-13 prior to the April 2013 carbon tax being imposed, and will now close or switch to 100% biomass in April 2013. This will result in at least a 30-40% reduction in coal generation, which will mostly have to be replaced by significantly more expensive gas generation - with wholesale UK gas prices also rising at over 10% per year due to an 8% per year reduction in North Sea gas output, being replaced by significantly more expensive imported LNG.

From January 2013 the Treasury raised the capital tax allowance to £250,000 for businesses. Government incompetence watchers will be interested to note that this follows a reduction in the capital tax allowance 9 months earlier from £100,000 to £25,000 a year, which almost looks as if the Treasury hasn't got a clue what it's doing... surely not.

Solar panel price rises are suspected to be on the cards for 2013 as the recent over capacity situation in the solar panel market reduces due to huge increases in demand from China, as well as reduced output from some lower tier suppliers mothballing plants, bankruptcies and companies pulling out of the market. Most solar manufacturers have been running at a loss throughout 2012, which isn't going to be a position that can continue long term, so some level of price rises are almost inevitable in our opinion.

The exact wording on DECC's maximum number of quarters of no cuts prior to an automatic cut is as follows

Degression will be skipped if deployment is below a floor threshold (for a maximum of two successive degressions – so there will be a minimum of 3.5% degression every 9 months).

page 16

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