Feed in Tariff adoption continues to slow in second quarter
Small-scale renewable energy installations under the Feed-in-Tariff Scheme reached 398,188 in the second quarter of 2013. This is the third quarter in a row to show a reduction in new installations. Is the message of ROI offered by FiT getting lost?
Data from Q2 2013 shows 18,994 installations and 127.07 MW of added renewable energy generating capacity.
Growth in Installations Slowing
Although 18,994 installations is a pretty sizeable number it is the third quarter in a row to show a reduction in new installations.
Renewable energy adoption under FiT is continuing but is slowing down.
Growth in installed capacity is somewhat more stable and a trend of increasing installation size continues.
To see the full findings from Green Business Watch visit http://greenbusinesswatch.co.uk/fit-installation-update-june-2013.
After The Gold Rush?
Tariff changes that came into effect in early 2012 saw the Feed in Tariff rate drop from 43.3p/kWh to 21p/kWh. Installation figures clearly show the effects of a rush by consumers to lock in the old, higher rate.
Green Business Watch Editor, Alastair Kay, commented, "Late 2011 and the first quarter of 2012 look something like a gold rush for Feed in Tariff installations. High tariffs and the impending tariff cuts produced a huge spike in solar PV installations as people rushed to lock in the old tariff.
"The question now is what level of activity will the market settle down at? Has the government got the right balance between encouraging adoption and accounting for reducing costs?"
The government has built a "degression" mechanism into the Feed in Tariff scheme which sees tariffs reduce each quarter but only if adoption targets are met. The difficulty is that if adoption targets remain unmet for 3 quarters in a row, then an automatic reduction is triggered anyway.
"The degression method seems a sensible idea. It stops huge shocks like the one created in early 2012. Reducing tariffs even as adoption levels continue to fall below target though, seems to make much less sense. In solar PV, the government has a technology with massive public support. It is very important to maintain the motivation for continued adoption." said Kay.
Ofgem has announced that current Solar FiT rates will remain untouched at 14.9p/kWh for the period October to December 2013.
Reductions in the cost of solar PV equipment have seen installation costs drop significantly over the period of the Feed in Tariff scheme. The result is that today's Feed in Tariffs still provide a significant return on investment.
But is the message getting across?
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