Cutting rates on a whim as opposed to taking a more structured approach causes unnecessary stress and places untimely pressure on investors.
London, UK (PRWEB) November 30, 2011
invezz.com, a UK information website about green and ethical investments, released an article today on the consequences of the new FIT rates, which are expected to take effect as of April 2012. The article comes in response to the recent announcement by the Department of Energy and Climate Change (DECC), which confirmed much-speculated on plans to slash in half the existing FIT incentives for small-scale solar photovoltaic (PV) installations in the country.
The article claims that all PV installations, which are currently under construction, must be registered in the Ofgem system by December 12, 2011 if they are to take advantage of the existing higher FIT rates. As of April 2012, new lower rates will be imposed on all projects approved after the cut-off December deadline.
invezz.com further explains that current FIT rates are set at 43.3p per kWh and are paid for 25 years after the initial PV installation, giving investors about 7 per cent return on their investment. Under the new policy, these rates will drop to 21p per kWh, resulting in approximately 4 per cent return on investment. Therefore, the website states, after April 2012, a solar installation, which cost around £10,000-£12,000 to build, will take almost double the time to be paid off. Instead of 10 years, investors can expect to be in credit for 18 years.
invezz.com also reacts to the short notice the UK government has given investors to react to the changes. “Cutting rates on a whim as opposed to taking a more structured approach causes unnecessary stress and places untimely pressure on investors,” says Tonka Dobreva of Dezz, the digital media agency operating a number of green investment websites, sustainable-investment-guide.com included. “This message of uncertainty artificially makes the solar sustainable investment market look like what it is not and should not be portrayed as – an unstable and high-risk playfield.”
The article claims that the government’s hasty decision can create a ripple effect, scaring away investors in other industries as well. In the context of the larger Euro crisis, this instability could discourage entrepreneurship, contracting the job market and affecting the economic stability in the country, the website says.
invezz.com also notes that investor reluctance to put further funds into the renewable energy sector and develop zero or low-emission, cost-effective technologies could bear larger energy and environmental consequences for the country and its environmental goals. The portal cites a report by the International Energy Agency (IEA) to illustrate how the government’s new energy policy translates in the broader energy picture. The IEA 2011 World Energy Outlook estimates that global energy-related greenhouse gas emissions have spiked by 5.3 per cent in 2010 to a record 30.4 gigatonnes (Gt). Echoing the IEA recommendation, the article warns that governments will have to take urgent and consistent policy action to avert catastrophic climate changes and “viciously more expensive” energy in the future. By 2035, the website explains, emissions will reach 36.4 Gt, leading to global temperature increase of more than 3.5°C.
To read the full article and to get more information about the sustainable investment market, visit http://invezz.com/analysis/alternative-investments.
Dezz is a UK-based boutique digital media company providing original and reliable up-to-date information in the area of carbon credit trading and sustainable investments to large investment company decision makers, NGOs and to eco-minded individuals.Dezz Limited, 843 Finchley Road, London, NW11 8NA. Registered in England and Wales as a Limited Company. Company Number: 07376661
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