It has been a turbulent few months for the Solar PV industry. If you’re having trouble keeping up with the latest news on the government’s feed-in tariff, you’re not alone. As there’s a general lack of clarity on the current situation, and plenty of speculation, we thought we’d take a moment to bring you up to date and explain how the changes are likely to affect you.
The message for new customers is simple. Install by 31 March, and the rate you receive is guaranteed to be no lower than 21p per kWh. When you consider that wholesale panel prices are 50% less than where they were at the start of feed-in tariff in April 2010 this gives a substantial return of around 10%. There’s also a small chance that your rate will be raised to 43.3p per kWh depending on the outcome of the appeal by the Department of Energy & Climate Change (DECC). Either way you are still getting a fantastic return on your investment.
Background to the current situation
On 31 October DECC revealed proposals to halve the 43.3p feed-in tariff for domestic installations to 21p per kWh. There was a general consensus in the industry that such a cut was necessary due to falling prices and to make the most of the allocated funding and help as many people as possible benefit from solar energy.
However the way the cut was introduced angered many in the industry because the proposed cut was scheduled to come into force on 12 December 2011 before the end of the consultation period. The case went to the High Court, and on 21 December Mr Justice Mitting upheld the challenge, ruling that bringing in the cut two weeks before the end of the official consultation period wasn’t just unreasonably, it was illegal.
Whilst this ruling was seen as a victory for the solar industry unfortunately it has led to more uncertainty.
DECC appeal
The saga continued when DECC decided to appeal against the High Court decision. Outlining the grounds for the appeal, a DECC statement argued that the High Court ruling had been based on the view that cutting the tariff would defeat the object of the scheme – to encourage the small-scale generation of renewable energy.
DECC disagreed with this premise, stating:
‘The overriding aim of the proposed reduction in tariffs for solar PV (as set out in the recent consultation) is to ensure that over the long term as many people as possible are encouraged to install small-scale low-carbon generation (including other technologies as well as solar PV) and benefit from the funding available for the FIT scheme.’
Climate Change Minister Greg Barker defended the government’s decision to appeal, warning that the feed-in tariff scheme had already exceeded its budget for the current financial year.
The Court of Appeal was set for 13 January as the date for the ‘rolled-up’ appeal hearing, meaning that the application for permission to appeal and the appeal itself (if granted) would take place that day. The results would then be announced the following week.
Friday 13 January
The entire UK solar industry waited to hear the result of the DECC appeal against the High Court ruling on the feed-in tariff.
As the hours passed once again no decision was reached, the case would linger on, and we could have to wait weeks for a final decision.
A statement on the DECC website reads:
‘The Court of Appeal has not yet decided whether to give permission for an appeal or made a judgement on the FITs case. The Court will wrap up the decision on permission for an appeal and a possible judgement if an appeal is allowed in the next few weeks. Once the outcome is known we will consider our options and make an announcement on the way forward to provide clarity to consumers and industry.’
What now?
As stated at the start of this article install before 31 March and you’re guaranteed to get at least 21p per kWh, which still makes for a good investment considering rising energy costs. There’s a chance that the rate could increase to 43.3p, but don’t let that be your only reason for going ahead. Think about the other, long-term benefits of Solar PV, and install now if you’re happy with 21p.
If you decide to wait until after 31 March things are more uncertain. We’re optimistic that the 21p rate will continue, although homes may be required to reach a minimum energy efficiency standard in order to qualify. That’s another reason why it’s a good idea to install sooner rather than later. As in order to meet the energy efficiency standard may mean an outline of around £6,000 – £9,000 before investing in Solar PV!
What nobody in the industry wants to happen is a boom-and-bust scenario. While a return to the 43.3p tariff could be viewed as a short-term victory – and would result in a small number of very happy customers – this could cause a further deeper cut to the tariff soon after.
Whatever the outcome of the appeal, Therma Rise will remain strong believers in the future of solar energy in the UK. Our customers are our priority and we’ll do all we can to help homes and businesses benefit from generating their own renewable energy – now and for years to come.
