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Retroactive FIT

Retroactive FIT (Feed-in-Tariff)

 

The new retroactive measures in Europe, especially in the flourishing PV market of Italy and Greece, cut the Feed-in-Tariffs (FiT) of operating photovoltaic plants by 30%. The new measures, called as “new deal” is applicable to all the renewable energy systems. However, of all the renewable energy plants, the solar power industry faces the biggest challenge. For example, the new deal asks the PV energy producers in Greece to contribute 35% of their total income for the year 2013 to the state-owned electricity market LAGIE. The primary aim is to fill the gap of 700 million used by the producers from the LAGIE’s fund.

While the measures are applicable to all the renewable energy producers, they only need to pay 10% of the income to the LAGIE fund. The only exception is that solar PV installations receive a complete exemption.

Retroactive FIT cuts

There was a second measure introduced that concerns the reduction of retroactive FIT (feed-in-tariff) even for operational renewable energy source plants. Once again, the PV industry suffered a steep reduction, which is 30% on average of the initial tariffs. The rate cuts also apply to the solar rooftop installations.

There is a smooth reduction in the FIT by 20% for smaller PV plants that generate 20kW each and not installed on buildings. Likewise, it is applicable to farmers if the generation does not exceed 100kW. Other renewable plants such as hydro and wind projects, see a smaller reduction that is 5% on average.

Factors considered for the cut

There are several factors taken into consideration for a reduction in PV plants such as the technology utilized, the time taken by the project for development, the entire cost of the installation, and even the location. Additionally, a critical factor is taken into account – whether the project received any further aid such as tax exemption and direct subsidy. The projects that received such grants have even further reduction in retroactive FIT (feed-in-tariff) cuts.

The introduction of the cut aims to bring down the deficit of the LAGIE RES funds. The government plans to maintain the zero level until 2020 or 2025. Likewise, the new tariffs were higher than expected by the companies when the news about the new reduction FIT broke out.

Power purchase agreement

As the companies will and are facing losses with the new deal, the government planned to extend the power purchase agreement with the renewable power source producers by another five years.

Good news

The new bill, in the end, does bring good news – the Regulatory Energy Agency (REA) is set to begin the process of accepting new applications for installation of the solar photovoltaic systems. The agency stopped accepting the applications in the year 2012 and provided an extension to the pending applications until the end of the year 2014.

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