08.02.12
FITs cuts defended
The cost of solar panel installations has dropped, new data suggests, as ministers defend the cuts to feed-in tariffs (FITs). Energy minister Greg Barker is expected to announce a change in the way FITs are administered and additional funding for the scheme on Thursday.
The average installation cost for solar panels was £15,000 in 2010, but the costs is now an average of only £8,000. This figure could fall to £6,000 this year, according to research from consultancy Parsons Brinckerhoff, commissioned by DECC.
Because of the fall in installation costs, customers on original FITs may be getting a much higher rate of return than originally intended.
Government plans to cut FITs were recently judged unlawful because the decision was announced before the end of the consultation, but Barker is expected to announce how the FITs can be changed legally, by gradually ratcheting down the tariff, keeping the rate of return at about 5%.
Funding for the scheme is also likely to be increased, to around £1bn.The extra cash is coming from money that was under spent on larger-scale renewables, such as wind farms.
Barker told the Guardian: “The costs have come down much faster than Ed Miliband thought in 2010, when the payment was fixed. That has led to much greater deployment. We had to take quick action. I know that [the changes to feed-in tariffs] have damaged confidence in the industry. But the new figures speak for themselves.
“There is the potential for solar power to become competitive with fossil fuels without subsidy within the lifetime of this parliament. Solar has gone from being one of the most expensive forms of renewable energy to one of the cheapest.”
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