How the Changes to the FiTS for Solar Panels May Affect You

The recent proposed changes to the Feed-in Tariff Scheme have left a lot of people with many questions about the solar panels they’ve installed or are planning to install. The UK government has provided answers to many of these questions. If you’re uncertain about how the changes affect you, or want to understand more about the changes before deciding to install solar panels, these answers may give you the information you need.

Why is the government changing the tariffs, and why are the reductions so steep?  According to the government’s energy officers, solar PV is the most costly technology that is funded through the FIT scheme and is the dominant microgeneration choice for most people in the UK. Since the FiTS was introduced, the costs of installing solar panels has fallen by about 30 percent. The tariffs were always meant to decrease in line with the reduction in solar panels installation costs, but the original projected rate only reduced the rate by 9 percent, when the actual cost reduction was more than tripe that rate. Thus, the return on investment was more than double what was intended.

The reductions are in line with what is happening throughout the EU. Germany, France, Spain, Italy and Belgium have already reduced the tariffs for solar PV systems in the past year.

Is it still financially viable to install solar PV systems that are under 4kW?  When the feed in tariff scheme for solar panels was introduced, it was meant to deliver a rate of return of 5 to 8 percent for solar PV systems that were well-located. Taking into account the reduction in installation costs for solar panels and the projected cost of electricity, the new proposed tariff of 21p will deliver a 4 percent tax-free rate of return for well-located solar PV installations.  Considering the changes in the investment market since the introduction of the FiTs, 4 percent is a reasonable rate of return on the investment in a solar PV system.

Does the change in the FiTs apply to the export tariff as well as the base rate?  At this time, the government has no plans to change the export tariff at this time. The export tariff applies to any electricity generated by your solar panels and exported by you to the national grid.

Will my solar panels be affected if they are already installed?  Only those solar PV systems with an eligibility date on or after 12 December 2011 are affected by the revised tariff rate. If you were enrolled in the FiTs before that date, your tariff will be paid at the 43p rate for the guaranteed period of 25 years. If your solar PV system was enrolled between 12 December 2011 and 3 March 2012, you will receive the 43p rate until April 2012. After that date, you will receive the 21p rate.

Is there enough capacity to deal with a rush to install solar panels?  The UK government estimates that there is plenty of inventory and capacity to deal with any acceleration in the ordering of solar panels and solar PV installations. Contact a local solar PV installer for more information.