The chilling effect of the coalition’s proposed cuts to feed-in tariff incentives on planned solar projects with 50kW capacity was hammered home last week with the release of new data suggesting that virtually no mid-sized installations will go ahead if the incentives are slashed as planned.Officials from the Department of Energy and Climate Change (DECC) last week hosted a workshop alongside the Micropower Council and the British Photovoltaic Association where they were presented with detailed evidence on how the proposed feed-in tariff cuts of between 40 and 70 per cent are expected to result in a freeze on all projects with over 50kW capacity, including community-owned and public sector projects.
“We’ve all had our rant about the cuts, now we need to help ministers with the evidence they need to make decisions,” Dave Sowden, chief executive of the Micropower Council, told BusinessGreen. “It is still a bun-fight, but it is turning into an evidence-based bun-fight.”
Officials saw presentations from three solar developers – building giant Kingspan, solar specialist Suntech and insulation and solar technology installer Mark Group – all of which demonstrated that the scale of the feed-in tariff cuts proposed in the government’s ongoing review will make the full range of 50kw plus projects unviable.
Most notably, Kingspan used three real life projects with capacities of 100kW, 250kW and 500kW to undertake a detailed analysis of the rates of return available to firms at different locations and under the current and proposed tariff regimes.
The analysis found that, with the current tariffs, firms deploying the projects could expect to receive rates of return before tax ranging from 7.1 per cent for a 100kW installation in Edinburgh to 11 per cent for a 500kW array in Plymouth.
In contrast, once the tariff proposed in the government’s consultation is applied, none of the projects attains the five per cent rate of return DECC has said in its impact assessment that it wants to achieve. The best rate of return is 4.7 per cent for a 100kW array in Plymouth, while all other projects would deliver returns of between 3.8 and -1.2 per cent.
Significantly, Kingspan’s analysis is based on real life projects and the company has offered to make all of its calculations, invoices and contracts available to DECC officials.
A DECC spokeswoman said that the workshop was part of the government’s efforts to support its ongoing consultation exercise, adding that the department was in “listening mode” and committed to ensuring that “everyone gets the chance to put their view across”.
Source: businessGreen
