The digression, which will also harbour significant impacts on larger, commercial installations, represents a reduction of 64 percent. Despite the announcement being a reprieve from the 87 percent digression that was initially proposed back in August 2015, the reduction to 2016’s Feed-in Tariff rates will have a significant impact on solar PV going forward.
Find the Feed-in Tariff rates that will be enforced in February 2016 below:
|System capacity||Current Feed-in Tariff rate (p/kWh)||Proposed Feed-in Tariff rate for 2016 (p/kWh)||Actual Feed-in Tariff rate for 2016 (p/kWh)|
Despite government legislation stating 40 days of active parliament notice must be given before such a change in the Feed-in Tariff can be enforced, DECC has enforced a ‘pause’ that will run from January 15 until when the reductions come into action. This pause, in effect, means that any solar PV systems that aren’t commissioned before the 14 January will only be eligible for the reduced rate of Feed-in Tariff payment.
The right to invoke the pause clause has been stated by DECC as a cost-controlling measure sanctioned to ensure an even and appropriate spending of 2016’s Feed-in Tariff budget allocation of £100 million.
Also being introduced into the Feed-in Tariff as of February 2016 is deployment capping.
By introducing deployment capping into the Feed-in Tariff, customers are no longer guaranteed the rate of tariff at the time of their installation. Instead, when, and if, solar PV deployment reaches the pre-designated cap for that quarter, customer’s tariffs will be put on hold until the tariff reopens in the following quarter. The government states that capping deployment and allocation of the Feed-in Tariff way will help to control cost.
As per the quarterly solar digressions, this will decrease the rate of payment the applicant will receive by approximately 3 percent.
As with the nature of the Feed-in Tariff in the past, their will still be quarterly digressions to the Feed-in Tariff. However with the introduction of deployment capping, customers thinking of switching to solar will need to be consciously aware of the extent to which being impacted by a digression will impact their investment. Furthermore, the usual rushes to install solar PV arrays before quarterly deadlines may be replaced with customers hurrying to install as soon as they can following a recent deadline and backlogs of applications carried over from a previous cap clogging the system.
Digressions to the solar Feed-in Tariff will still occcur every three months, with the first cut scheduled for the end of March 2016.
For more information on how GreenGenUK think solar PV can remain a strong investment opportunity as we move through 2016, see our post on the topic by clicking this link.