Legal actions, Government announcements and FIT uncertainty
FITs and Starts
FIT rates were not originally scheduled to be changed before 1st April 2012, yet at the end of October, in launching a consultation on the FIT scheme, the Government announced significant cuts to the FIT rates to come into effect on the 12th December 2011. This date was before the December 23rd closing date of the consultation period.
In a case heard in the High Court on 21st December – the judge agreed that the proposals to cut FIT payments before the official consultation closed were unlawful. DECC lodged an appeal against this decision. The Court of Appeal heard this case on January 13th and came back rejecting the appeal on January 25th. Following this failure, DECC announced: "The Court of Appeal has upheld the High Court ruling on FITs albeit on different grounds - we disagree and are seeking permission to appeal to the Supreme Court.” No formal appeal has yet been lodged.
While all this was happening, on January 19th DECC laid before Parliament an order which, regardless of the outcome of the appeal process, will set FIT rates for PV systems with an eligibility date after 3rd March 2012 to the lower levels as published in the consultation document.
So, if the Government wins on appeal, we are where we were before legal action began, i.e. the Government will continue with the consultation process, DECC will respond to the consultation, and FIT rates are very likely to drop to the rates listed in the consultation document.
If the Government does not win on appeal, then the 43p tariff looks set to remain in place for all all systems completed before 3rd March 2012.
With all this uncertainty about, the only thing we can state for certain is that any PV system installed from 12th December will get a FIT payment of at least those values published in the consultation document (e.g. 21p/kWh for 0 –4kWp retrofit installations).
FIT Consultation
The first stage of the consultation on feed-in tariffs closed on December 23. Around 3,000 responses are thought to have been received. The results of the consultation were originally expected around the end of January this year. However, since the FIT court case, the publication date has been set back.
Government maintains that it is necessary to go through with the cuts, and still believes the 12/12 deadline is necessary. The FIT consultation also proposed that there be a strong link between solar PV and energy efficiency or the Green Deal from 1 April 2012. This tie into energy efficiency is seen by many as potentially highly problematic as the rules, accreditations and marketplace for the Green Deal are not yet established.
Market impact
The actions of DECC have obviously had a very marked effect on the PV market. The chart below shows the number of MCS installations (0-50kWp), by week:
Market Outlook
DECC are seeking to slow down the rate at which the FIT is spent. However, DECC have also stated they are seeking to establish a more transparent FIT digression model. So while rates will certainly continue to drop, hopefully they will do so in a manner that the PV industry can predict and plan for.
The tie into energy efficiency from April 1st, if approved, will probably create a delay, additional costs and additional obstacles for people wanting PV on their buildings. This means there is likely to be an additional surge in installations before 1 April.
Looking forward, there is likely to be greater competitive pressure in a smaller market. That competitive pressure will favour those who can reduce their installation costs and component costs effectively and provide a better service.
We will continue to strive to give our wholesale customers a competitive advantage, firstly by reducing the price we will pay to manufacturers for components and secondly by providing our customers with new, faster installation methods.
