The Solar industry was eclipsed earlier this week when the Department of Energy and Climate Change (DECC) announced drastic cuts of 50% to the Feed-in-Tariff (FiT) scheme. Originally the cuts were only expected to affect people who fitted panels after 31st March 2012. However, the date is much sooner than first thought. The Government’s proposed change to the tariffs will take effect in April of next year but in practice it actually takes effect much sooner. This is due to the fact that the cut-off date to have your system installed and registered (in order to receive the higher tariff for the next 25 years) is the 12th December 2011. If you are registered after that date, you will still receive the old tariff, but only until April when you would see the amount of money you receive for the electricity you generate cut in half.
The FiT is the funding scheme for electricity generating renewable technologies such as solar power and wind turbines. The tariff works by sending energy that you do not use for your own consumption to the national grid, which in return pays you per kilowatt hour you produce. The scheme was introduced to kick start the low carbon electricity generation, thus appealing to business and individuals who would not typically go down this eco-friendly route. Up until 12th December 2011, those who invest in solar installations will receive the Feed-in-Tariff payment of 43.3p per kilowatt hour (p/kWh) for the next 25 years. However, this figure will be halved to 21p/kWh from April 2012 for anyone who installs and registers after the cut-off date in December.
So why is the scheme changing?
The government claim that the change is due to the fact that technology has become cheaper and so it is no longer as expensive to get solar panels installed. However, others state the reason for the cuts is that the government initiative
has proved so popular that their budget has been adversely stretched.
It is estimated that the period of time needed to pay off installation costs under the future tariff will take an estimated 18 years as opposed to 10 years that it took under the higher tariff. However, this time frame could vary as the amount of electricity produced depends on factors such as size, location and electricity usage.
Unfortunately, there is more doom and gloom, in order to qualify for the new scheme you will need to obtain an Energy Performance Certificate of at least a level C. This means that you may have to make adjustments to your property to even obtain the reduced rate of 21p/kWh. Also even if you have already bought your panels but they
are waiting to be fitted, they must be fully operational before the deadline.
The cut will not affect existing solar panel owners, who will continue to receive the higher rate feed-in tariffs for the next 25 years. So if you were thinking of making the switch to solar energy, now is the time to do so. Those that are registered and operational with the scheme before 12th December will receive a guaranteed Feed-in-Tariff payment of 43p/kWh making it all the more important for those that are interested to make the investment sooner rather than later.
There are worries that as 25 years is a long time, there is nothing to stop future governments changing feed-in tariffs Philippa Heap, senior press officer for the Department of Energy and Climate Change, confirmed “there will be no retrospective changes”. It is however worth noting that future changes are unlikely to have an effect on existing
The feed-in tariff is under government review at the moment. To read about the FiT review, go to the Department of
Energy and Climate Change’s website: http://www.decc.gov.uk/en/content/cms/meeting_energy/renewable_ener/feedin_tariff/fits_review/fits_review.aspx.
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