Friday, January 14, 2011

Feed-in Tariffs budget to be slashed by 10%

The level of support for Feed-in Tariffs is to be reviewed, as the budget must be slashed in 2014/15 by at least £40m or 10 per cent.

Energy minister Chris Huhne has praised FITs for introducing renewables to individuals who would not have traditionally considered installing them, but said that there has to be a review because the recent Spending Review called for a reduction in the scheme's projected costs.

Huhne was responding to questions on the Financial Times' Energy Source blog last week on a wide range of questions covering feed-in tariffs, the Renewables Obligation, emissions targets and green jobs in the UK.

"These savings will be achieved through the planned first review of the scheme in 2012, to take effect in April 2013, unless higher than expected deployment requires an early review," he said.

Solar panel and other installers have expressed alarm over Government noises that there is to be a review. If the tarrif rates are to be changed this would affect decisions on whether to invest in micro-renewables by householders.

Huhne also said his department was keeping an eye on whether FITs were encouraging the development of "large, industrial-scale, greenfield based solar farms", which would "distort the available funding for domestic solar and other technologies".

"Whilst we won't act retrospectively, we stand ready to take measures to limit the access of such schemes to FITs if that is shown to be necessary", he said.

The Government is also to consult on the proposed support levels for the Renewables Obligation after 2013 in summer 2011, and give its response in autumn 2011, says Secretary of State Chris Huhne.

Attempting to assure investors, he said that changes to bands, if any, will come into effect from 1 April 2013 (2014 for offshore wind).

"The RO will remain in place until 2017, so developers can make decisions now, knowing what their support mechanism will be" he continued. "We are also consulting on whether to give developers the choice between the two mechanisms in advance of 2017, and would genuinely welcome views. From 2017, the whole RO mechanism will be grandfathered, so developers can know that investments made now will be protected."

Support levels for new projects between 2013 and 2017 are decided by last March's banding review, and the Government recently announced that it is speeding up that process.

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