UK: Does It FiT? Government Consults On "Improvements" To The Feed In Tariff Scheme

On 9 February 2012, the British Government published a further consultation on their review of the Feed in Tariff (FiT) scheme for subsidising low-carbon energy generation. This follows a previous consultation published on 31 October 2011, and a series of judicial reviews following the first consultation.

The consultations have followed recent demand for solar FiTs, which have significantly outpaced both expectations and the government's budget. As a result, the first consultation included proposals to halve FiT incentives. In order to slow demand, the first consultation also, controversially, set out an intention to implement the cuts 11 days before that consultation closed. While the results of the consultation could not be known until they were published, any business performed before the publication of the consultation results, but after the implementation date, would be performed without certainty of the FiT rates applicable to that work. Although the decision to pre-implement the cuts has been the subject of a successful judicial review, the government has maintained the uncertainty by successive appeals, with a Supreme Court hearing now pending.

The new consultation further reviews the FiT scheme, and confirms that the previous planned cuts of 50 per cent will be implemented. Greg Barker, the Minister of State for Energy and Climate Change, has said that the "new improved scheme" that is being proposed by the consultation will "deliver for the many". But is this the case? The industry generally does not believe so, but there are a few reasons for optimism in the consultation.

Proposed changes

The consultation represents further bad news for the industry. It proposes further cuts, the level of which will depend upon the demand for solar FiTs between now and the end of April. If more than 200MW of solar capacity is installed before the end of April, the government could cut support by a further 35 per cent, to a maximum level of 13.6p/kWh, effective 1 July.

For larger installations, with more than 250kW of capacity, the government is proposing an even lower level of support; if there are high levels of deployment in the coming months, the tariff could be as low as 4.7p/kWh, down from 30.7p/kWh less than a year ago.

Following a model currently applied in Germany, the government is then proposing to make a further cut in October, followed by cuts every six months. The aim is to reflect the fall in technology costs as the PV sector becomes more efficient and reliable over time, and demonstrates the government's view that the solar industry should "stand on their own two feet" (i.e. achieve grid parity without subsidies), "sooner rather than later". This is consistent with comments made by the UK Energy Minister, Charles Hendry, that the government is planning much more regular reviews and much more regular pricing changes to renewable subsidies.

A further, and less predictable, cut is contained within the proposal to stop increasing the FiT in line with inflation.

In addition, the consultation includes a proposed reduction of the payment period for the FiT incentives, from 25 to 20 years. This proposal comes as no surprise – at the rate with which technology is currently advancing, even where an installation would last for the duration of an anticipated 25-year design life, it would probably be more profitable to replace the installation with a more efficient installation before the 25-year period is up, and wrong for the government to incentivise the retention of an antiquated and inefficient system.

Finally, in a move that will disappoint large businesses, the consultation includes a proposal to implement a 20 per cent cut on FiTs to "multi-installations" (i.e. individuals or businesses with more than 25 installations). This further cut is likely to disincentivise large companies such as major supermarkets and hotel chains from installing solar across their portfolio.

Industry reaction

Unsurprisingly, the reaction from the solar industry has been generally negative. Many feel that additional cuts will further undermine an industry that already feels vulnerable following its exclusion from the Renewable Energy Roadmap. For more discussion on the Renewable Energy Roadmap and the related Energy White Paper, click here.

In addition, although the government has stated that it anticipates "steady growth" of the sector, this is not what the impact assessment that accompanies the consultation states. The impact assessment actually shows a contraction of the sector in the next couple of years (including 5,000 fewer people employed full time in the sector within a year), with employment levels only returning to the current level in 2015.

But there are also positives in the consultation, the most significant being the government's aim to reach 22GW of solar developments by 2020, a huge increase from the 1GW currently installed. Additional funding has also been identified to cover the budget over-spend over the recent months (the result of the surge in installations prior to the first set of cuts coming into force), and allocating Ł460 million for new installations in the current Spending Review period.

There is further good news in the relaxing of the plan previously stated to limit FiT eligibility to buildings with only "C" energy efficient ratings and above. Incentives will now be available for buildings with "D" ratings and above, which analysts have suggested will allow 50 per cent of buildings to be able to install solar panels, rather than 14 per cent if the government had insisted on limiting eligibility to "C" ratings and above.


Obviously, further cuts will not be well-received in the solar industry, especially for commercial developers; it now seems (because of the lower tariffs and the multi-installation provisions) that the increasingly limited FiT budget is being intended or focussed primarily for homeowners at the expense of commercial use. Some developers are already considering bypassing the FiT regime altogether, focusing instead upon larger installations where economies of scale can be found, and for which Renewable Obligations Certificates (ROCs), rather than FiTs, may be available.

That said, a stated commitment to 22GW of installations by 2020 is definitely a step in the right direction.

Questions arise from this commitment, though; namely, how will the government achieve this? As stated above, the government expects job cuts in the short term, instead of an expanding industry. Will the government increase tariffs at a later date if it thinks the 22GW target will not be reached? If the government does plan to increase tariffs, how would such an increase be funded, given the government's commitments to those other forms of renewable energy which may also require investment towards the end of this decade? The commitment is a positive step, but the implications need to be considered, and the solar industry will not feel secure until it has more certainty as to the methods of achieving such commitment.

The consultation on the changes to the solar PV FiT regime is open for comments until 3 April 2012.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.