The Coalition Government’s comprehensive spending review in October 2010 considered the Feed-In Tariffs.
At the time it said there would be no immediate changes – but sadly that has now been overtaken by events
What we reported at the time
Despite intense speculation beforehand, the Government accepted that any changes to the Feed-In Tariffs could be damaging.
It has therefore made no changes to the legislation nor to the tariff levels.
The first review of the tariffs will still be undertaken in 2012, to take effect from April 2013.
When this review is undertaken:
Feed-In Tariffs will be refocused on the most cost-effective technologies saving £40 million in 2014-15. The changes will be implemented at the first scheduled review of tariffs unless higher than expected deployment requires an early review.
What has happened since
In fact the government acted in contravention of these statements within four months, when it announced an early review of the tariffs.
It has also become apparent that the Comprehensive Spending Review agreed a specific spending cap for the tariffs of £360m in 2014-15. This means that the policy mechanism has been fundamentally changed from a price-based mechanism (where the price is set by the tariffs and the market is free to deliver whatever capacity it can at that price), to a volume based scheme (where the capacity installed is limited by a specific cap).
The £360m level seems to have been derived by scaling back by 10% from the previous government’s estimated spend of £400m. This was apparently based on the Regulatory Impact Assessment (which many observers believe was flawed as a projection of take-up of the tariffs).