Chris Huhne's Energy Review

In February 2011 Chris Huhne, Secretary of State for Energy and Climate Change, announced a complete review of the Feed-In Tariff scheme. Many were surprised that such a comprehensive review was called so early into the scheme. Indeed, the Feed-In Tariff scheme was only launched on 1st April 2010. So far over 20,000 solar energy systems have been registered on the scheme. Here we will look at the reasons for the review and what changes we can expect to see.

The Reasons behind the Review

Upon announcing the review Chris Huhne said he was concerned that large scale solar farms where exploiting the Feed-In Tariff system which was originally aimed at encouraging domestic homeowners to create their own electricity. There is a concern that larger commercial plants could use up the funding for the scheme intended for domestic users. It is important to note, however, that any changes that do come about as a result of the review will not come into effect until 1st April 2012 and will only affect new applicants.

What changes should we expect?

It is likely that the price given per electrical unit, known as a kilowatt, will drop. This was always expected as the scheme developed. There are rumours it could be up to as much as 50% of the current 41.3 pence per kilowatt. It seems highly likely that the type of solar energy system eligible for the scheme will be cut in an attempt to exclude larger commercial plants. This will aim to stop so-called solar farms being created solely for Feed-In Tariff payments. Whilst payments may decrease the scheme is backed for 25 years so current solar energy system owners should not panic that the tariffs will disappear immediately.

In calling the review of the Feed-In Tariff scheme the government is sending a clear message that will not tolerate businesses exploiting the scheme. The original aim of the scheme was to encourage domestic homeowners and communities to provide their own electricity through solar energy systems, such as photovoltaic solar panels. Some businesses have created large scale solar energy systems solely as a result of the Feed-In Tariff payments. It is highly likely that the changes in April 2012 will prevent this happening. We can expect a cap on payments or the exclusion of large solar energy systems from the scheme. Whilst this is cause for concern the fact the scheme is guaranteed to run for 25 years should provide some solace for potential energy system users.