As anyone who has had anything to do with Solar Panels or Renewable Energy will know, the UK government has been keen to manage the cost of running the renewable energy generation tariff budget by implementing a series of reductions over the last couple of years – this is known as ‘Degression’.
Although it may be a bit harsh to say the FIT is planned to become obsolete it is in fact an observation that has a lot of merit – Degression is a bit complex to explain but simply put, over time the constant planned reduction of the tariff rates will eventually bring the tariffs to zero.
For Solar Panels (photovoltaics) the planned reduction is carried out on a quarterly basis, currently at the rate of 3.5%, but this can be reduced or increased dependent triggers such as the volume of installations during the previous quarter year which is sometimes known as “Contingent Degression”.
This constant lowering of the tariff via the review can be delayed or “skipped’ for up to 2 review periods (consecutive) or can be increased by a factor of 2 (or even doubled more than once up to 28%). The actual amount of the next degression is very difficult to guess because of the many parameters used (there are even special corridors of deployment) in the calculation – even a “special” extra step can be introduced under certain conditions.