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Solar Market Should Remain Viable

By Howard Walsh, Farmers Guardian

THE Government is seeking further cuts in feed-in tariffs (FiTs) but solar installation specialists claim the figures should still stack up.

The new FiT is to be set at 21p/kWh for installations under 4kW from April 1, 2012, which although half of the previous level, will still support many solar projects, says Miles Thomas of Savills Energy.

But it will mean significantly lower rates of return – around 5 per cent. The cut off for maintaining the higher tariff payments will be December 12 this year when installations would need to be completed.

“This means if you aren’t about to install today, you will probably need to reassess your reasons for pursuing the technology, particularly your target returns,” said Mr Thomas.

“These new tariffs will render most commercial and domestic ‘rent-a-roof’ projects unviable, causing an enterprising industry to all but vanish. The Government looks like it has succeeded in removing investment angles to FiT supported solar.

“It has specifically attacked aggregated schemes – those multi-site projects promoted by a single developer – introducing a ‘multi-installation’ tariff at an even lower rate of 16.8p/kWh.”

“As it stands, installations in the range of 50kW to 5MW are able to choose between the Renewable Obligation (RO) and FiTs (with installations below 50kW eligible only for FiTs). As tariffs have been scythed back, some will no doubt look to ROCs to deliver large scale projects.”

Exeter-based renewable energy installer SunGift Solar claims, however, the reductions could actually have a positive effect and help stabilise the industry before it grows out of control.

“Many people appear to be concerned about this drastic reduction, but I don’t think the reduction in tariff is necessarily a bad thing, and perhaps they are now at the level they should be,” said the firm’s Gabriel Wondrausch.

But he described the December 12 deadline for installing systems which would benefit from the existing tariff rates as ‘ludicrous’.

“The Government does not appear to have considered the effect this short timescale will have on businesses in our industry. We must fit four months of installations into just six weeks,” he said.



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