Submission to Department of Energy and Climate Change’s consultation on the rates of Feed in Tariffs (FITs) to be paid for small scale low carbon electricity generation

Consultation on Feed-in tariffs scheme: Comprehensive Review Phase 1 – tariffs for solar photo-voltaic cells

A response from the Baptist Union of Great Britain, the Methodist Church, the United Reformed Church and Quakers in Britain.

1) Do you agree or disagree with the proposed new tariffs for solar photo-voltaic cells (PV)? Give reasons to support your answer.

The falling cost of PV systems suggests that the feed-in tariff could be reduced. However we are opposed to the proposed reduction to 21p/kWh. The disproportionate scale of this reduction threatens to disrupt an industry which is still at an early stage of development in the UK. The feed-in tariff has been largely responsible for a growth in green jobs in solar PV. We note that following the 50% reduction in the feed in tariff redundancies in the sector have been announced.

The current feed-in tariff of 43.3 p/kWh offers a return on investment, typically over a ten year time frame but even at this level the payback time is long for the average house-owner. At a reduced rate, given the high capital outlay and long pay back periods, those individuals investing in solar power are likely to be restricted to those with ethical and environmental concerns. We see value in encouraging investment from a broad range of sources including house-owners. Furthermore with rising bank interest rates the present return on solar panels would become less attractive and might need to be adjusted. We hope that the second consultation will provide an opportunity to explore these issues further.

The installation of solar PV on low-cost and social housing provides a benefit to those of low incomes through lower energy bills. Feed in tariffs should offer the private sector and local authority solar PV schemes sufficient incentive to invest while avoiding windfall profits. There is a danger that the proposed 50% cut could be interpreted by consumers as a weakening of the government’s commitment to incentivise renewable energy generation and could undermine consumer confidence in the solar PV sector.

2) Do you agree or disagree with the proposal of applying the new tariffs to all new solar PV installations with an eligibility date that is on or after a reference date that comes before the legal implementation of those tariffs? Give reasons to support your answer.

We are particularly concerned at Government plans to reduce feed-in tariffs from a date prior to the end of a consultation process that is addressing this issue. Planned church and community projects have been discontinued or put on hold following the unanticipated announcement of a reference date of 12 December 2011. These church-based projects have been devised on the expectation of projected feed-in tariff which it was assumed would be available to systems installed before 1 April 2012.

Community based projects take longer to plan and require a predictable schedule for the implementation of tariffs changes. This implies that the reference date should be known well in advance (six months notice would be helpful) to enable projects to be planned on a secure set of assumptions.

It would also be helpful to have some indication of the likely scale of reduction to feed-in tariffs well in advance. In this respect the adoption of clear and transparent criteria to determine future changes to feed-in tariffs would be helpful and we hope that this question might be explored further in the next phase of the consultation.

3) Do you agree or disagree with the proposed reference date of 12 December 2011? Give reasons to support your answer.

We strongly disagree. Community organisations and churches have not been able to accelerate the implementation of solar PV projects to meet the deadline of 12 December. Those who have put work into planning such projects feel frustrated and let down. Pulling the plug on the 43.3 kWh tariff in this way has the potential to alienate and lose the trust of those implementing pioneer community-based projects. At this early stage of adoption of solar power, these community-based projects have a potential demonstration value that is beyond the value of the savings achieved by early termination of the 43.3 kWh tariff.

4) Do you agree or disagree with the proposal to introduce new multi-installation tariff rates for all new solar PV installations that meet the definition set out above and have an eligibility date of on or after 1 April 2012? Give reasons to support your answer.

We would disagree with this proposal as currently outlined.

Regional church bodies (i.e districts, circuits, synods or associations) might receive FIT payments from multiple sites (for example FIT payments originating from systems installed on manses managed by Methodist circuits). Economies of scale are unlikely to be achieved by regional church organisations. Installation of solar PV on church roofs is complex and often more costly to implement than private projects due to planning permission, system design and access to roofs. The need to involve multiple stakeholders in the planning presents an additional barrier to implementation and roll-out of such projects. A reduced tariff for such systems would be unjustified equating local/regional church bodies that typically depend to a substantial degree on voluntary assistance with highly specialised profit-making businesses.

If the government does pursue this proposal we would strongly urge that charitable organisations (including faith groups due to the nature of their sites) be exempt from a lower multi-installation tariff.

We do not necessarily disagree with the principle of setting a lower tariff for large multi-installation projects that are able to realise economies of scale. We would question whether such a tariff should be applied to schemes involving a very small number of sites and suggest that the threshold of just two sites should be raised.

5) Do you agree or disagree with the proposed multi-installation tariff rates? Give reasons to support your answer.

We do not propose to offer a view on this question.

6) Do you agree or disagree with the proposal that for solar PV attached to a building, eligibility for the standard tariffs proposed in chapter 2 should be contingent on a minimum energy efficiency requirement being met? Do you have views on whether such a requirement should apply in relation to all buildings or just to dwellings or non-domestic buildings? Give reasons to support your answer.

In the case of dwellings we would have some sympathy with this proposal as long as measures can be implemented that are not unduly restrictive.

In relation to churches and other historic buildings we do not consider that the proposals as currently drafted are sensible. Our main concern is the proposed use of EPCs in the case of historic buildings. EPCs are unlikely to provide the best benchmark for the more complex requirements of energy efficiency in Churches. CIBSE benchmarking standards might well offer a better framework. Some denominations, the Methodist Church for example, are currently piloting an approach to benchmarking the energy efficiency of churches. We would be pleased to discuss this area further and to share with DECC the experience of some of our church and religious organisations in benchmarking energy efficiency of churches. However we feel that this area requires further work and consultation before the benchmarking of churches could be tied to eligibility of churches and other historic public buildings.

7) Which of our two lead options for the energy efficiency requirement – requiring a building to achieve a specified EPC rating, or requiring the installation of all measures that are identified on an EPC as potentially financeable under the Green Deal - do you prefer for (1) dwellings, and (2) non-domestic buildings? Give reasons to support your answer.

In the case of dwellings we would favour eligibility for the standard feed in tariff on the basis of the implementation of measures financeable under the Green Deal given the concern that there may be a small number of properties for which it might not be cost-effective to upgrade to ECP level C. However if eligibility for the standard feed-in tariff is tied to action under the Green Deal, the principle that the householder should not have to bear upfront costs should be protected.

Once the green deal measures are implemented the property should then be eligible for the standard tariff that was in place at the time of the commissioning of the solar PV system regardless of whether a Reference Date has passed in the intervening period. This enables the financing of the solar PV to be planned on the basis of a known feed in tariff, the eventual level of which is not subject to a timescale for the implementation of Green Deal measures on the property.

As discussed, in the case of non-domestic buildings we do not favour either option.

8) Under the first option for the energy efficiency requirement, do you agree or disagree with the proposal that the EPC rating required to be achieved should be level C or above? Give reasons to support your answer.

We do not favour eligibility on the basis of an EPC rating.

9) Do you agree or disagree with the proposal that, for a transitional period only, all solar PV installations attached to a building should initially qualify for the standard tariff, and their continued eligibility for that tariff should be conditional on the building to which the PV installation is attached achieving the energy efficiency requirement within a specified period? Give reasons to support your answer.

Such a transitional arrangements would be helpful particularly over the period of the introduction of the Green Deal when the mechanisms for its implementation are yet to be fully understood and appreciated by the public.

10) Do you agree or disagree that this transitional arrangement should apply to installations with an eligibility date on or before 31 March 2013, and that the specified period should be 12 months from the installation’s eligibility date? Give reasons to support your answer.

We would feel that the eligibility date should be determined once the Green Deal is in place and has a track record. It would seem feasible for any transitional arrangements to remain in place until an initial evaluation of the Green Deal has been completed.

January 2012