The Department of Energy and Climate Change (DECC) has now adopted all of the feed-in tariff modelling and forecasting recommendations made by Cambridge Modelling in our techno-economic analysis report on UK solar photovoltaic feed-in tariffs. As a result, the rigour and accuracy with which feed-in tariffs in the UK are forecast and administered has been greatly improved, allowing both government and industry to better plan for, and respond to, the long-term changes in UK feed-in tariffs.
The greater insight that these recommended improvements provide into the key sensitivities around component and installation costs – along with their impact on the feed-in tariffs required – gives a more representative indication of future market conditions and supports stable industry growth in the UK. Both of these elements are essential contributors to achieving the sustained and significant levels of industry expansion required in the UK’s low carbon energy generation sector over the coming years.
Dr. Mark Hughes of Cambridge Modelling recently attended the Solar Thermal Energy Future Technological and Regulatory Research Issues Meeting at Brunel University in which the future of research, innovation and legislation for the industry was discussed by a collection of European industry professionals.
Cambridge Modelling published a report today that examines the impact of government plans to reduce feed-in tariffs on the UK solar photovoltaic industry.
“The proposed changes to the feed-in tariff scheme will significantly delay the development of UK solar photovoltaic industry efficiencies,” said Dr. Mark Hughes, Director at Cambridge Modelling. “In the absence of the changes, small solar photovoltaic installations are set to achieve grid parity (equality with retail electricity prices) by 2019. The changes to the scheme will delay grid parity and extend the need for feed-in tariff support by approximately 3 years,” said Dr. Hughes.
The report also identifies important omissions from the DECC consultation on the feed-in tariff changes.
Dr. Hughes said, “Large savings for electricity consumers from the development of UK solar photovoltaic industry efficiencies under the existing tariff schedule have been overlooked. In 2020 alone, these missed savings could exceed £57 million”.
Dr. Hughes also warned that, “The DECC consultation assumes optimistic capital cost forecasts and large reductions in the rate of return on investment which leaves the UK solar photovoltaic industry with no margin for module price fluctuations in a traditionally volatile market.”
“Cambridge Modelling recommends a more comprehensive approach to the determination of feed-in tariff reductions, based on long-term price trends, to ensure steady and sustainable levels of growth in the UK solar photovoltaic industry,” said Dr. Hughes.
For further information, please download the full report, “UK Solar PV Industry: Implications of the Planned Feed-in Tariff Reductions”.
This report examines the impact of the UK government’s planned reduction in feed-in tariffs (FITs) for solar photovoltaic (PV) installations up to 250 kW. The analysis described here explores key considerations, not covered in the consultation on the Comprehensive Review Phase 1, that are pertinent to grid parity in the UK solar PV industry, the price of retail electricity and national commitments under the Renewable Energy Directive.
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Cambridge Modelling has added a new extension module to the Low Carbon Simulator which provides additional functionality for examining the impact of feed-in tariff policies and changes therein. This new module is currently being used to assess the impact of changes to solar photovoltaic feed-in tariffs proposed by the UK Government and due to take effect in December 2011.