A proposal by the government to cut the FiTS for solar PV installations and other small electricity generating projects was stalled in early December when the High Court ruled that the government plan was legally flawed. FiTS – the Feed-in Tariff Scheme – pays people to use electricity generated by their own solar panels rather than buying energy from traditional electricity suppliers. The program is an effort to boost adoption of solar PV systems and other microgeneration systems by the populace, and increase the proportion of renewable energy use in the UK.
To achieve this end, the government’s feed-in tariff scheme set up a schedule of fees to be paid to building and property owners based largely on the size and capability of the solar PV system. For most homeowners, that meant a payment of 43p for every kilowatt hour of solar electricity generated by their solar panels, and an addition 6p “export tariff” for every kilowatt hour that they feed back into the grid.
The scheme was designed with adjustable tariff rates, but comes with the guarantee that property owners would receive the rate fixed at the time of registration for 25 years. Thus, anyone who has registered their solar panels with the scheme already is guaranteed to receive the 43p rate for a full 25 years.
In November, the government announced that the FiTS had been successful beyond all expectations. In fact, the solar PV systems installed and registered in the last two months of 2011 increased the solar capacity of the UK by a factor of 10 – a milestone the government had not expected to reach before 2015. While that’s great news for the proponents of renewable energy, it stresses the fund established to pay out the tariffs. Because of that, the government proposed to reduce the FiTS for newly registered solar PV systems by half as of 4 January.
While the government’s own website now carries that pricing structure – 21.1p as of January 4 – the High Court has stalled the implementation of the plan, stating that the proposal was legally flawed. The government has now announced plans to halve the solar subsidy in April for solar PV systems installed after 3 March.
The government has also appealed the High Court’s ruling on its January proposal.
What This Means if You Install Solar Panels
If your solar PV system was installed before November, you are guaranteed the higher 43p rate for 25 years. Solar panels installed between now and 4 March may qualify for the higher 43.3p rate, depending upon the result of the government’s appeal. If you wait until after 4 March to install solar panels, your system will most likely only qualify for the 21p tariff. The lower rate will still be guaranteed for 25 years, and the Department of Energy and Climate Change estimates that at that rate, most homeowners will recover the installation costs of their solar panels in 10 to 12 years as opposed to 5 to 8 years.
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