In a move that has caused widespread controversy within the industry and uncertainty in customers, the DECC last week revealed proposed Feed-in Tariff cuts of up to 87 percent from the start of January 2016. The announcement, a result of the long-awaited Feed-in Tariff review, also revealed more stringent plans for digression which could see an end to payments on certain system sizes as soon as 2019.
The Feed-in Tariff review, a report which highlights the impact the Feed-in Tariff has had on the uptake of solar installations, highlighted an increase of solar installation far exceeding government expectations. The report states that actual installations of solar PV have already met 2020 targets.
What is the Feed-in Tariff?
The Feed-in Tariff was initiated by the government to incentivise the uptake of solar PV installations and help reach long-term targets for renewable energy production in the UK.
In effect, the Feed-in Tariff makes payments to home and business owners who have installed solar PV for the solar energy they produce, paying customers a set amount for the energy they generate and another set amount for any excess energy that is unused and can be sold back to the grid.
What are the proposed Feed-in Tariff cuts
|System Capacity||Existing Rate (p/pkW)||Proposed Rates (p/pkWh)|
|0 – 4kW||12.92||1.63|
|4kW – 10kW||11.71||1.63|
|10kW – 50kW||11.71||3.69|
|50kW – 100kW||9.63||2.64|
|100kW – 150kW||9.63||2.64|
|150kW – 250kW||9.21||2.64|
|250kW – 1MW||5.94||2.28|
Are the proposed Feed-in Tariff cuts definitely going ahead?
No. Although the solar industry has been semi-expecting a significant digression in the Feed-in Tariff rates, nothing to the scale of 87 percent was expected.
As it stands, the planned cuts are only proposed and are currently undergoing an eight week consultation process whereby the industry can put its case forward. Once the eight week period is up a final decision will be made which will then follow a two month implementation period where customers will have the chance to uptake installations before the January deadline.
What will the proposed Feed-in Tariff cuts mean to customers?
Despite suffering large-scale cut backs by the government before, the solar industry has always been able to offer lucrative returns on investment on solar PV systems. However, the proposed reduction in payments will make it difficult for the industry to offer competitive prices offering returns comparable to other money making alternatives.
The challenge for the solar industry now comes in finding ways of reducing the cost of solar PV systems or increasing the energy utilisation to still be able to offer customers solutions that will pay themselves back in similar timescales to systems before the cuts.
What difference will the Feed-in Tariff cuts make to domestic customers?
Below is a breakdown of the overall financial benefits of the same 4kW solar PV system calculated with tariffs before the proposed cuts and the rates should the proposals go ahead.
- 16 x SolarWorld 250w black panels
- 1 x StecaGrid 3600 inverter
- 1 x Schletter domestic mounting system
- 1 x Rayleigh single phase generation metre
- 1 x Wireless remote monitor
Total annual benefit:
- With existing Feed-in Tariff rates as of 02/09/2015 – £923
- After proposed Feed-in Tariff cuts at the end of 2015 – £456
Will the proposed Feed-in Tariff cuts impact existing installations?
Again no. Customer who have entered into the Feed-in Tariff since its introduction are guaranteed their payments at the rate agreed when their application was submitted.
Customers who are thinking of or in the process of installing a solar PV system will still be assured of the current Feed-in Tariff rates as long as their system is commissioned and application is submitted before the end of 2015.
What do GreenGenUK think about the proposed Feed-in Tariff cuts?
Having seen the Feed-in Tariff see several set back since its introduction, GreenGenUK have some advice for any potential customers.
Although the news is potentially damaging for the solar industry, nothing is set in stone and there’s a chance that the proposals will be revised. However, if you are seriously considering installing solar PV for your home or business, now might be the time. If the plans are confirmed to come into action at the beginning of 2016, this will likely result in a mad rush by customers to get their systems installed. Panels could become scarce and companies could become inundated with work.
GreenGenUK would not advise any customer rush into undertaking their installation, but if you’ve reached the decision to give the green light now could be the time.
To discuss the impact of the proposed Feed-in Tariff cuts with one of renewable experts or if you have any queries about a new or existing quote contact us in the office on 01326 564513.