Government announcement on solar subsidy means future stability for all

Many homeowners may be aware of all the commotion that has surrounded the government funded feed-in-tariffs (FITs) since they launched in April 2011. This fuss would have undoubtedly put most consumers confidence at a low, however in a recent announcement made by the Department of Climate Change (DECC), stability for solar is on the horizon. We can now reveal that the subsidy is set to receive some security which will at least last for the next three years.

From August 1 2012, the subsidy which currently stands at 21p kWh for 4kW systems introduced into domestic properties will drop to 16p kWh. As the FITs were never set to be an everlasting subsidy, this new inevitable decrease has also been introduced with a range of new modifications set to help rebuild consumer confidence by bringing stability into the market. These modifications include;

• A multi-installation tariff for organizations with over 25 installations. They will receive 90 % of the standard applicable tariff, which is up from 80%
• Export tariff will be increased from 3.2p to 4.5p/kWh for those installations with an eligibility date on or after August 1;
• The FIT lifetime will be reduced from 25 to 20 years for those installations with an eligibility date on or after August 1; and
• Tariffs for installations that do not meet the energy efficiency requirements will mirror the tariffs for standalone installations.

This revision combined with the new rate has now outlined the FITs plans for the next 3 years, unless there is significant uptake. The DECC have announced the new tariff of 16p kWh and have outlined the process in which the tariff will decrease over the next three years. The announcement detailed that the FIT will steadily decrease at a rate of 3.5% every 3 months, beginning October 1st 2012. This means that over the course of a year the subsidy will reduce by around 2.24p which is a welcome and slow decline considering it has dropped a staggering 27.3p since December 2011. This new rate is set to introduce and reaffirm consumer confidence and put back some confidence in the installer that has invested their time and money into solar too.

As the new tariff is set for August 1 2012, consumers still have a 9 week window in which to gain the current higher rate of 21p kWh so as always time is of the essence for those wishing to obtain the higher rate which will be guaranteed for 25 years.

Carl Bennett, Managing Director of Trade Skills 4U, Britain’s premier electrical & renewable energy training company reveals his thoughts on recent announcement. “There have been a lot of gloomy headlines about solar power but the fact is the returns on offer are far better than anything you can get in the bank. The smart money is on solar PV. And by investing in solar power not only do householders protect themselves from rocketing electricity bills; they help local businesses and employment. Our business has enjoyed growth as result of our investment in solar.

"Last year we built a first storey training roof, which is the only one of its kind in the UK, in order to train solar installers and in the environment they will be working in when they qualify. Our dedication to ‘real life’ scenario training as seen a steady rise in business and helped to drive us forward in the recession when many have cut back. Now that government have announced future stability for the Feed-in-Tariff, we can only predict a steady and stable future for solar which is of course great news for everyone.”

Martin Gebbett, Director of DPS Renewable Technologies says: ‘The announcement by the DECC signals an end to the uncertainty that has prevailed in the PV solar industry since September 2011. We believe the new set guidelines allow us to plan move clearly for the future and drive our business forward. We have seen a noticeable increase in enquiries over the last few weeks and see a positive outlook’.

The environmental campaign group Greenpeace is keen to encourage people to invest in solar. Dr Doug Parr, Policy Director at Greenpeace UK explains why: “Local renewable energy remains a valuable contributor to a sustainable economy. We welcome further solar PV systems, taking advantage of genuinely sustainable energy in the drive to protect the planet from climate change.”

Virginia Graham, Chief Executive of the REAL Consumer Code said; “It is true that solar power can still offer attractive returns to householders in the right circumstances. We recommend anyone interested in installing solar power to ensure the supplier is listed on the REAL and MCS websites and to read our guidance for consumers carefully before going ahead: www.realassurance.org.uk/consumers/top-tips .”

There has been over a quarter of a million installations across the UK since the launch of the FIT in April 2010. The industry has blossomed to employ around 25,000 people and it is set to grow rapidly, despite the recession. Thanks to campaigning by the Solar Trade Association the role of solar power is now recognised by Government and the Prime Minister with 22GW anticipated by 2020.