Pictured: Mark Newton

The large drop in Feed in Tariff (FIT) rates for solar PV could have a devastating effect for those looking to create on farm energy from this technology.

The announcement on 31st October 2011 was not totally unexpected, as solar PV took 97% of all FITs in September, however is hugely frustrating for many farmers and landowners who have invested considerable time and effort into this technology.   Furthermore it is unsettling for the rest of the renewable's market, which will see the FIT rates for other technologies revised at the end of 2011 for implementation from April 1st 2012 if not before.

The proposed changes to the solar PV tariff will see projects with a total installed capacity of up to 4kW drop by over a half from 43.3p/kWh down to 21p/kWh. Projects of 10-50kW will see a drop by more than 50% from 32.9p/kWh to 15.2p/kWh. This significant reduction would only allow a projected return of 4.5-5%, making it unviable for many looking to install this form of renewable energy.

To benefit from the current rate farmers and landowners need to get projects installed and registered before 12th December 2011. For those looking to do new projects, they will not have time to go through the planning process or get a grid connection.

Mark Newton, Head of Renewable Energy at Fisher German comments "This has effectively killed off solar PV investment potential for many farmers and landowners in the short term as the cost of borrowing is about 6%, so returns of 4.5-5% are simply not viable.

"It will be impossible for those who have only recently started solar PV projects to get planning permission, secure a  grid connection, and register for FITs in time for the 12th December deadline. The new date is unworkable for many and will stop people investing in a project which would have provided them with green electricity for at least 25 years.

"That said, the price of solar PV has come down by 60-70% in the last 2 years and we expect with the abandonment of so many projects, solar PV installations could become viable again in the next 12-18 months as panel supply outstrips demand.  

Darren Edwards of Fisher German added "We have already seen some suppliers revisit their quotations, dropping 50kW projects from £100,000 to £80-85,000 in a bid to ensure they are not left with a backlog of panels.

Mark Newton concludes "All changes in the FITs will unsettle the renewable energy market and what we need to be able to do is to get renewable's projects registered for specific FITs later before embarking on a lot of forward expenditure, particularly in the wind, hydro, and AD market, as the lead in time with complicated planning applications can be 1-2 years."

For further information, please contact Mark Newton on 01858 411246 or email mark.newton@fishergerman.co.uk

For more information about Fisher German, please visit their website here: www.fishergerman.co.uk