FITs will remain unchanged until April 2012 “unless the review reveals a need for greater urgency” UK Energy Secretary Chris Huhne announced on 7 February. This comprehensive review of the feed-in tariffs is designed to provide investment certainty, but the announcement is unfortunately likely to have the opposite effect, introducing as it does the possibility that tariffs may be changed before March 2012.
DECC’s announcement promises that the Government will not act retrospectively and that “installations which are already accredited for FITs at the time will not be affected.” Because of the lead time between putting cash into a project and getting it commissioned, this assurance is not enough. With the possibility of tariff changes taking effect before April 2012, investors could now find themselves lumbered with projects that would have been profitable if they were to have been successfully commissioned by March 2012, but which are now unable to recover their costs within realistic timescales.
To provide certainty for investors, the review now needs to take place quickly and to set a clear period of validity for tariffs going forward, without any get-out clauses. The focus appears to be on solar photovoltaic schemes of greater than 50kWp capacity, so investors in wind and smaller solar projects should not be as concerned as those looking to invest in large solar farms.