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Local MPs Response to FOE Letter

Havant and East Hants MPs have replied to a letter from local FOE campaigners protesting against cuts to Feed In Tarrifs next month.

Responses from MPs

David Willetts MP – Minister for Universities and Science

Click Here for his response

 

George Hollingbery MP – Meon Valley Constituency

Dear Mr Cobbett

Thank you for your e-mail. Mr Hollingbery has asked me to send you a copy of a letter he has been sending to constituents.

Thank you for your letter regarding the proposed reduction in the feed in tariff (‘FIT’). I can understand your concerns surrounding this matter and I appreciate you bringing this issue to my attention. I have a strong interest in renewable energies so I too was interested to hear this proposal.

I appreciate your concerns regarding the planning permission for solar panels. More information on planning permission and solar panels can be found here: (http://goo.gl/HSmCN). However on your specific case regarding the timing and the cut-off date of December 12th I wish to draw your intention to what the Government have stated as part of the on-going consultation:

We recognise, though, that some prospective FITs generators who have incurred or committed expenditure before this consultation is published may not be able to complete their installations and submit their applications for FITs before 12 December 2011. If generators in this position decide to proceed with their installation and the tariff changes are implemented as proposed, they will automatically receive a lower tariff from 1 April 2012. In forming the proposal we have taken into account the possibility of hardship to persons in this situation, but we think the proposed approach is reasonable given:-

  • · The urgency of the concerns about the impact on the scheme’s budget of continuing high levels of uptake at the current tariffs, including any rush of new installations triggered by this consultation;
  • · The impact will only be on prospective FIT generators who will have 6 weeks notice from the date of consultation; and
  • · The reduced tariffs are still expected to provide a rate of return of 5% in most cases for well sited installations and 4.5% in the case of the tariffs for <4kW solar PV installations. The FITs scheme was never intended to provide windfall profits and in the current climate we regard these returns as reasonable.

I understand that this is not the answer that you were looking for and clearly the cut-off date being so close is a problem. However the Government have also raised the idea that the cut-off date may not apply. It states:

However, we will consider representations made during the consultation both as to (i) the principle of applying the lower tariff to new installations installed from a reference date (12 December 2011) that comes before the legal implementation of those tariffs (1 April 2012); and (ii) whether the proposed reference date should be 12 December 2011 or some other date.

The consultation closes on 23rd December 2011 and you would be more than welcome to make a representation. Whilst I appreciate that this reply is unsatisfactory I would like to draw your attention to the reasons behind the reduction in the FIT.

Primarily the reduction is because the Government values the FIT scheme and wants to ensure its long term success. When it was first set up (as a result of the 2008 Energy Act) the anticipated return for generators was around 5-8%. Actual returns were significantly higher at an average of 10%. This level of yield built into a scheme of this sort is unaffordable in the long term. Because of the reduction in pricing of solar PV installations the Government can now get more bang for its buck by reducing its yield to a low level and ensuring that even more installations are put in without spending getting out of control. This also means that the Government can support more of the installations to help us meet the Kyoto agreement. To explain this reasoning further I have enclosed a Written Ministerial Statement from the Minister Responsible (Greg Barker MP) which was published last week.

I do hope that this helps and if I can be of any further help in the future please do not hesitate to get in touch.

http://www.decc.gov.uk/en/content/cms/news/gb_fits/gb_fits.aspx

 

Damian Hinds MP – East Hampshire

Dear Mr. Cobbett,

Thank you for getting in touch with me on behalf of members of the Havant and East Hampshire Branch of Friends of the Earth following the Government’s announcement on solar power and the Feed in Tariff scheme. I am very aware that the decision to reduce the subsidy for domestic solar power production will come as big change for some small businesses and for home owners considering installing solar panels in the immediate future. I do not underestimate the difficulties this can cause, especially for small undiversified businesses, and I have written to the Minister to ask if mitigating measures can be considered. But while these changes are sudden, I do see that an urgent effort is needed to keep the FIT scheme budget under control and reflect the costs of the technology for solar photovoltaics (PV), which have fallen a great deal in a short space of time.

You may be interested to see the presentation that I made at the Home Energy Day in Alton on Saturday, especially Slide 6:

http://www.damianhinds.com/Content%20-%20PDF%20Docs%20for%20web%20site/Govt%20action%20on%20Home%20Nrg%20-%20Damian%20Hinds%20-%20Alton%20Nov%202011.pdf

The new proposals are to introduce a new tariff for schemes up to 4kW in size of 21p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure those schemes receive a consistent rate of return.

As I understand it, there is an upside to the change, too. The total amount of subsidy (which, as I understand it, remains unchanged) will go further, so benefiting more schemes.

There is no question that adjusting to the new lower tariffs will be a big challenge for many firms, especially smaller operators, but at the same time many in the solar industry have themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year. The cost of an average domestic PV installation has fallen by at least 30% since the start of the scheme – from around £13,000 in April 2010 to £9,000 now.

A recent surge in households installing solar PV has threatened to break the budget for the entire FIT programme. There were over 16,000 new solar PV installations in September alone – nearly double the number installed in June. Nearly three times as much solar PV as projected has so far been installed.

While the changes are being brought on by the very positive uptake in new renewable energy sources and decrease in its cost, we must accept that there is a finite amount of money (which of course itself comes from other bill-payers) available for the FITs scheme.

At current typical install costs, the new tariffs will offer a rate of return of around 4.5% to 5% index linked and tax free for domestic installations – this is broadly comparable to what was intended when the scheme was set up.

I know that the Government will be doing what it can to ensure that the green economy continues to grow and I shall certainly continue to press the needs of both small local companies and communities.

Thank you again for taking the time to write to me.

Yours sincerely,

Damian Hinds

 

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