Government’s feed-in tariff cuts – SPECIAL REPORT

Over the weekend, stories regarding a Government’s decision to amend the feed-in tariff payments circulated.
Figures were suggesting the current tariffs, for new installers, would be reduced to 20p from the current 43p per kilowatt hour. What really caught the headlines was the fact that the Government were going to reduce the tariff’s as early as this December, rather than the previously thought revisal date of next April.
The 20p rate (if it’s true) is still 50% better than the 9p rate some solar industry insiders were suggesting may happen.
The reductions stem from the fact that the Government has been over-whelmed by the take up of the tariff scheme by homeowners and commercial enterprises since April 2010 when they were launched.
The resulting over-subscription (against original forecasts) has left the Government with the problem of funding the tariffs at their present rates for new installers and it was already warning that it might have to dip into next years set aside funds to continue funding this years installers.
Now (Monday 31st Oct), we have the official figures from the Department of Energy & Climate Change:
From December 12th 2011, the tariff payment will reduce to 21p/kWh for solar photovoltaic systems of up to 4kW (currently 43.3p per kWh). Tariff reductions for systems between 4kW and 250kW have also been proposed, having already been reduced earlier in the year.
The Government believes that the continued falling costs in solar installation, quoting a fall from £13,000 to £9,000 for an average system since the tariffs began, mean that homeowners should still see a decent rate of return on their investment, quoting figures of around 5% return.
In a statement by Energy Minister Greg Barker, it cited that to be able to sustain the feed-in tariff payments, the reductions are necessary. During September alone, there were 16,000 new qualifying FiT solar installations – double the number of June and three times the anticipated number of installations.
The 12th December date tariff change will apply to all new solar PV installations with an eligibility date on or after 12th December 2011. These installations will move to whatever the new tariff is when announced in the scheduled FiT review in April 2012.
Installations already earning the present tariff will remain unaffected by the reductions.
The Government has also hinted that after April 2012, there might be extra qualifying criteria for home’s wishing to claim the FiT’s. These are likely to be centred around the energy efficiency of individual properties.
The return on investment might take a little longer, but solar PV installations should still be given careful consideration if  you’re thinking about reducing your current energy bills. No one doubts that energy bills are going to continue to rise and with the Government’s predicted return rates of around 5%, that’s still pretty good compared to what savers are getting at the moment.
And don’t forget, installations for comparable sized systems are falling – some by as much as 30% since the tariffs inception and the likelihood of extra qualifying criteria could mean more initial expense on projects like loft and wall insulation, to qualify after April 2012. We’ll have to wait and see of course exactly what the criteria changes will be.
The biggest losers may well be community projects that were involved in free installations, since the firms investing won’t get such a quick return.
Solar Panel Quoter can find you the best 3 companies in your area, based on quality, price and homeowner feedback, and with the pressure now on installers to reduce their prices, can help you make an informed decision about installing solar panels on you home.
If you are thinking of going ahead with solar – then any delay could be costly.
You can read the full Government announcement here.
photo credit: lollyknit

Oh woe is the feed-in tariff

Last week YouGen’s blog ran an article following a meeting between the Energy Minister and various representatives of the photovoltaic solar industry.

The purpose was to discuss the implications of the Governments spending review on the feed-in tariff scheme, which has so far helped contribute to over 10,000 solar panel installations in 2010.

You can click here to read the full article yourself but I did want to pick out one or two choice bits.

Firstly, that the Government is now saying (worryingly so) that the so-called solar farms which have started to spring up with investors attracted by the lucrative feed-in tariffs may in the future have to be exempt from the tariff system, which was originally designed with private individuals in mind.

As the Government pointed out, there is a finite amount of money available for the scheme and it may have to protect that figure for take up by private residential individuals at the expense of large scale installations (or there could be restrictions for qualification based on overall output etc).

Secondly, that because the ‘pot’ of funding has been reduced, future tariff changes may have to more severe, again, dependent on uptake.

The only good bit of news was that no cuts would be applied retrospectively, so if you’re thinking of getting solar panels installed, then now is the time to act.

photo credit: d’arcy norman

Renewable tariffs escape the Government spending cuts

Of course installing some form of renewable energy on your home is going to contribute to the reduction in harmful co2 emissions, but whether you’re looking to be totally self-sufficient or not, installing solar panels onto your home has a number of tangible benefits.

Solar energy is ‘free’ so once you’ve paid for the installation, aside from any maintenance costs, every watt of electricity is free. With most systems presently lasting well beyond their 25 year lifespan (some by as much as 10 years), that leaves plenty of free energy years.

Reducing your running costs – Solar energy can drastically reduce your everyday energy bills, depending on the size of system you have installed, and in some cases, a large installation can generate surplus electricity that you can sell back to the grid.

Making your home self sufficient – where previously, you’d have suffered the same power losses as everyone else when there was a power cut, now you’re generating your own – you’ll soon be the envy of the neighbours.

Making difficult new builds easier – If you’re renovating an old barn or cottage that’s not connected to the mains, it’s a very expensive job to have the correct power delivery cable hooked up and laid by the appropriate energy companies. By exploring solar energy (or other renewable energies) for your project, you may actually be able to reduce building costs, whilst still having the benefit of being self sufficient.

Making your home more attractive to new buyers – There’s no doubt that renewable energy is here to stay, so fitting solar panels on your home, will one day in the future probably contribute to it’s selling price or make it easier to sell. It’s a bit like double glazing, when the jobs already been done, it’s one of those ‘big jobs’ house buyers can tick off the to-do list.

We’ve even seen some reports that suggest fitting solar panels helps protect your roof. We haven’t seen anything to quantify such a claim, but it’s true that adding solar panels does add another ‘layer’ between the weather and your roof.

Photovoltaic (electricity producing) solar energy works by light, not sunshine, so even on cloudy days, your system will generate some power.

And with the Government not cutting the Feed-in Tariffs and confirming the planned go-ahead of the Renewable Heat Incentive scheme, it looks like micro-generators have escaped last weeks cuts, making generating your own electricity and hot water as attractive a proposition as it ever was.

Click here to get your online solar panel installation quote now.

photo credit: clownfish

Spending review cuts didn’t leave the renewable energy sector crying

Yesterday, the Chancellor announced the Government’s big spending cuts. Of course, details had already leaked / been announced earlier in the week – most notably the cuts to military budgets, losses of equipment and personnel expected etc.
The Internet was rife with rumours of 10% cuts in feed-in tariffs and the scrapping of renewable heat incentives altogether, which pundits claimed would effectively ‘kill off’ any green energy revolution. A devastating picture of failed co2 targets and renewable energy companies going bust up and down the country were widely predicted.
Chris Hulme in particular in his role as Climate and Energy Secretary must have feared the worse, and many worldwide manufacturing companies were reportedly waiting with pens poised above the dotted line to see which way the Government blew.
As we now know, these fears were mostly unfounded. Here’s what was announced:
Feed-in tariffs – for micro-generators of electricity via renewable sources e.g photovoltaic solar panels – there will be no reduction in feed-in tariffs until the original formal review date in 2013
Renewable Heat Incentives – for micro-generators of heat via renewable sources e.g. ground source heat pumps and hot water solar panels – These will still go ahead as planned, in June 2011. The scheme will be funded directly from the Department of Energy and Climate Change, however there’s some confusion over what sizes of installations it will cover. A total of £860 million has been set aside by the DECC to fund the scheme.
The Warm Front Scheme will be scrapped. It’s replacement – the Green Energy Deal will cover grants for improving home energy efficiency.
£200 million was pledged to support low-carbon technologies and £1 billion will be allocated to a new Green Investment Bank.
So all in all, the renewable energy sector can, I think, breathe a huge sigh of relief and now, hopefully, homeowners will have the confidence to go ahead with installing their own renewable energy systems.
The confirmation of the feed-in tariffs remaining untouched should send a clear message to investors that the UK is a good place to be investing in right now. This will hopefully lead to more larger installations and persuade manufacturing businesses involved with renewables (solar panel manufacturers etc) to set up shop on UK soil.
Supporters of the schemes and tariffs maintained thought that these were essential programmes if the UK was to have any hope of meeting its co2 reduction targets for 2020, when the aim is to be producing a third of our energy from renewable sources.
There were some casualties – namely the Severn Estuary tidal barrage programme which supporters claim would have generated 5% of the UK’s energy needs, after the Government reckoned it would be too hard to attract the necessary private investment for the multi-billion project.
Instead, plans were outlined for new nuclear reactors.

photo credit: david fulmer

Treasury may force cut in feed-in tariffs – speculation grows

According to a report by Renewable Energy Focus last week, there’s mounting speculation that despite the weeks earlier comments from Energy Secretary Chris Hulme at the Tory Party Conference, the Treasury will force cuts to the feed-in tariffs upon the Department for Energy and Climate Control.

The tariffs were set up this April (2010) and at the time were guaranteed until 31st March 2013, before the figures would be amended. Cuts would normally have been based on available funds and a hoped for decrease in the cost of manufacturing etc.

It’s got the industry so worried that 64 top business leaders have written an open letter to westminster, claiming that any bringing forward of cuts to the feed-in tariffs will seriously dent investors confidence in the UK and would lead to the UK being unable to meet its carbon reduction targets.

“confidence in the clean tech and renewable energy sectors may cause investors to flee altogether”

Any reduction if feed-in tariffs only affects those homeowners and businesses applying for the tariff after the date of any changes to rates – existing ‘members’ and users of the feed-in tariffs should continue to enjoy the rate at which they signed up to.

Read the full report from Renewable Energy Focus by clicking here.

I guess we’re all going to have to wait until the 20th October when the spending review is published.

photo credit: rizka budiati