UK renewable energy industry warns against cutting FITs

Current speculation over Photo Voltaic Feed In Tariffs in UK as part of the Comprehensive Spending Review is rocking investor confidence just six months into the scheme. Many Companies, including E.ON-UK, British Gas, Schott UK and Solar Century Holdings, have signed a letter urging the government to maintain the necessary regulatory stability.

The UK established its renewable energy FITs in April. Currently, photovoltaics (PV) receives what is globally considered to be very generous tariffs, with new installations under four kW earning 36.1 pence per kWh: installations between four and ten kW also receive this rate. Retrofit installations under four kW receive the best tariff, of 41.3 pence. Those between 11 and 100 kW can collect 31.4 pence, while installations between 101 kW and five megawatts (MW) receive 29.3 pence.

These tariffs were supposed to stay in place until April 2013. However, there has been recent press speculation that the Government may be considering the quite unprecedented step of prematurely cutting the feed-in tariff payments prior to next year’s planned review of these tariffs, the outcome of which would be due to take effect in April 2013.

The feed-in tariff’ has guaranteed small scale producers of renewable and low carbon electricity a long term fixed price for their power, has given investors the confidence to grow an industry rapidly and in line with the Government’s expectations. The new adjustment in pricing will have a profoundly damaging effect on long term investor confidence in the clean tech and renewable energy sectors, and may cause investors to flee altogether, thereby stifling any future investment and seriously jeopardising the country’s ability to meet its climate change and renewable energy targets.

We have seen similar stories earlier this year from Germany, Spain & Italy. But something on same line from UK was not expected so soon. Do we visualize a similar situation arising in France by next year considering the  slow growth and the growing deficit? If I was an investor in French solar industry, I will certainly take this possibility into account– “déjà vu”.

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