Generation payments to homeowners for a 10kW or less domestic solar PV system installed in April-June 2016 will drop to 4.32p/kWh. Export payments, payable on 50% of the solar electricity generated, remain unchanged at 4.91p/kWh. Assuming that the second quarter’s deployment cap is not reached, generation payments for installation in the July-September period will be 4.25p/kWh.
What Is A Deployment Cap?
A deployment cap is a maximum level of solar capacity that can be accepted for Feed In Tariff (FIT) payments each quarter. By limiting the amount of domestic capacity that can be added, DECC (Department of Energy and Climate Change) can control expenditure on solar FIT payments. Hitting a quarterly deployment cap means that any FIT applications for solar PV systems installed after the date the cap is reached will not be accepted until the following quarter. In addition, there is an automatic cut of 10% in the FIT generation payments for new systems in the new quarter. This way the government can ensure that they limit the spend on solar FIT payments to a specific level.
What Happened To The Deployment Cap In February-March 2016?
As expected after the big cut in FIT generation payments in February, the 10kW or less solar PV sector did not get close to its deployment cap in the 8 February to 31 March 2016 period. 21.0MW of domestic solar capacity was installed in the period against a deployment cap of 48.4MW. This compares with 80MW of installations during Feb-March 2015 and means the domestic solar installation industry is down to 25% of its size a year ago.
The unused 27.4MW of domestic solar capacity will be added to the original April-June 2016 target, resulting in a new second quarter deployment cap of 77.0MW. It would be a surprise if domestic installation for the April to June period exceeded 30MW which is why it is likely that payments for new installations in the July-September period are likely to qualify for FIT generation payments of 4.25p/kWh. In the same period of 2015 118MW was installed.