The Government’s consultation on the UK Feed In Tariff has begun and their proposal to slash rates by 87% has sent shockwaves throughout the solar industry.
The Feed In Tariff for those that don’t know is a Government payout that helps to encourage the uptake of solar panels and other renewable technologies by providing a financial incentive.
The scheme is open to anyone willing to invest in and install solar panels. Below we have listed the three main ways installers of solar panels can benefit. The figures below are based on average data taken from a selection of our most recent installations.
The example below is based on a 4kWp system comprising of 16 solar panels, which is a typical size for a domestic solar panel installation.
1) Lower your electricity bill – As the solar panels produce electricity you can use the energy in your home for FREE. This equates to a saving of between £250 – £280 / year
2) The Feed In Tariff – This is a payment for all of the electricity the solar panels produce in a year, even if you use all of the electricity! This currently pays 12.92p/kWh and is due to drop to 12.47p/kWh from the 1st of October 2015. The proposal will see the rate drop to 1.63p/kWh from January 2016, seeing the payment drop from £430 down to just £60.
3) The Export Tariff – You will also get paid for any electricity you don’t use and send back to the grid. It is generally assumed that this will be 50%. This will normally earn you an extra £40 – £80 per year.
The Feed In Tariff and Export payments are linked to the Retail Price Index (RPI) a measure of inflation, with the new proposal linking payments to the Consumer Price Index (CPI). This change will significantly reduce money earned across the twenty years lifetime of the tariff.
The consultation is now open and asks consultees to answer 35 questions about the planned changes to the scheme. Follow this link to read DECC’s proposals and add your comments;
Why is this happening now?
In July Amber Rudd the Energy & Climate Change Secretary made a pledge to reduce household bills whilst reducing emissions.
Some have viewed the solar incentives as “too generous” and believe that the costs of solar panels have come down in price requiring the Government to offer less of an incentive.
The Feed In Tariff is funded via a small green levy added to each energy bill, which is in turn passed on to the Government from the energy suppliers in order to fund the scheme.
The solar and renewable industry has seen positive growth since the Feed In Tariff’s introduction in 2010, with increased employment and a much needed boost to our economy. It has also driven the UK’s carbon reduction journey forward!
Amber Rudd’s pledge seems to be “one step forward and three steps back” when the industry is thriving! It has left the solar industry asking why and how can this be positive?
Whilst the cost of a solar panel installation has come down significantly from £10,000 – £12,000 to £6,000 – £8,000 in the last two years, the sharp and sudden cuts proposed would come too soon with the industry unable to bring the costs down to a level that makes sense for the purchaser and profitable for the installer!
What happens next?
The DECC consultation will close at 11:45pm on the 23rd October and if there is no agreement to cutting costs, the Feed In tariff could be abolished as soon as legislation can be passed, which would be January 2016.
The cuts are only a proposal at the moment and the exact date they will be implemented is unknown. It is however certain that the Feed In tariffs will be cut; the question is by how much?
How to beat the cuts!
Worried about the cuts? Don’t be! As long as your installation is installed and registered for Feed In Tariff payments before January 2016, you will be locked in for the full twenty years and receive the higher rate available at the time of registration.
A typical 4kWp (16 panels) solar array will take just a day to install and from the date you sign your contract with us, we can have you generating and locked in within just two – three weeks!
To avoid missing out on the great opportunity that solar panels provide, contact Purelec Energy who can complete a no obligation assessment of your property and quotation followed by a professional installation.