New Feed-In Tariff Rate

Following the uncertainty throughout January and February regarding the Feed-in Tariff for Solar PV, we can finally see some light at the end of the tunnel and have a clearer picture about the future for Solar PV. This is the last week for installations which may or may not receive the higher rate of tariff (43.3p for up to 4kWp). Systems installed from 3rd March onwards will receive the lower rate of 21p for systems up to 4kWp and as highlighted in our last blog, this still represents a viable investment.

However, it won’t be as simple as it has been to receive a feed-in tariff as from 1st April, homes will need to achieve a ‘D’ rating on and Energy Performance Certificate in order to qualify for the full rate. If this is not achieved, a PV system would only attract a 9p/kWh tariff.

The Energy Performance Certificate (EPC) is a new requirement brought in by the Department of Energy and Climate Change (DECC) to encourage a whole house approach when it comes to energy efficiency measures. So if your home doesn’t have adequate insulation, for example, or an old, inefficient boiler, you may not achieve a ‘D’ rating and would therefore need to sort these issues out before qualifying for a feed-in tariff on a Solar system.

There will of course be many homes that achieve a ‘D’ rating straight away so for them, it’s just a case of having the survey done before proceeding with a Solar PV installation and we will be arranging this for our customers on their behalf.

I must also mention further changes to the Feed-in tariff that are currently under consultation.  The Tariff is set to be reduced again from 1st July to somewhere between 13p-16.5p depending on the capacity of systems installed during March and April.  The prospoal is that tariffs are then reduced by a further 5% in October and 10% every six months thereafter.  Other measures include a new a reduction in the lifetime of the traiff from 25 years to 20 years and possible removal of the index linking to RPI or linking to CPI instead.  We should know the outcome of this second stage of the consultation in April.  Some installers feel this is the end for the UK Solar PV market but I disagree.  My view is that now we can see what’s coming, we can be clear with our customers exactly what Solar PV has to offer them … reduced electricity bills, protection against rising energy costs, a return on investment of 4-5% and the satisfaction of knowing that you are contributing towards a healthier environment.

Feed-in Tariff Update

Since our last blog on this subject, a High Court judge ruled that the proposal to reduce the Feed-in Tariff with effect from the 12th December was unlawful. DECC (Department of Energy and Climate change) lodged grounds for appeal against this ruling on the 4th January but last week (Friday 13th) the Appeal Court failed to reach a decision on whether the Appeal would be granted saying that they hoped to give their decision by early February. In the meantime, home owners and businesses are left wondering what tariff they would receive if they installed a system now. As a result, many are holding back on making a decision and understandably so as people want to know what return they will receive for their investment. It’s frustrating for our customers and frustrating for us as an installer, particularly as we know that the new tariff still offers a viable investment opportunity.

The bottom line is that the minimum guaranteed tariff a customer would receive for a system up to 4kWp installed now is 21p. We priced a 4kWp Solar PV system in Bedford this week at £9000. On the right roof, this system would deliver more than 10% return on investment on the 21p tariff. And this is worst case scenario. There is a slight chance that a system installed now would receive the 43.3p tariff if DECC loses its appeal which would just make it a fantastic deal. But installing a Solar PV system gets a little more complicated from 1st April if the rest of the Government’s proposal remains unchanged.

From 1st April, residential homes will need to achieve a ‘C’ energy rating in order to qualify for a Feed-in Tariff. The longer people delay their decision, the more lilkely it is that they could miss out on what is currently the best deal they will ever get for Solar PV.  Our message to anyone thinking about having a Solar PV system in Bedford, Milton Keynes or surrounding areas is that if you are happy with the offer at 21p tariff, act now!  It might end up better but the chance of this happening is reducing the longer the court proceedings drag on and we don’t want people to miss out before the next deadline of 31st March.  Book now to avoid disappointment again.

Change in Feed-in Tariff for Solar PV

On 31st October 2011 the Department of Energy and Climate Change (DECC) announced a fast-track review of Feed-in Tariffs for domestic Solar PV systems. In short the proposal is to reduce the tariff for systems up to 4kWp to 21p and this change will affect any new installation from 12th December onwards. At first reading it was both a shock and a disappointment … is this the beginning of the end for what was a rapidly growing market? We don’t think so! In reality, the price of PV components has come down significantly since we joined the industry 18 months ago and Feed-in Tariff’s should probably have been on some sort of regular review programme linked to capital investment. The change effective now simply brings the tariff back in line with installation costs. We hope that this change will stabilise the PV market and create long term, sustainable growth for businesses like ours.

November was a crazy month for installation companies and suppliers alike. It was our busiest month on record as we worked hard to fit in as many installations as possible prior to the deadline, especially for those customers who had already committed to an installation. However, we are hoping that once the dust settles in January, we can get back to a more steady pace of installations! As an industry, we will need to focus on engaging with those customers who want to install Solar PV for the right reasons … generating their own free electrcicity, offsetting the rising costs of energy, doing their bit for the environment. Solar PV is no longer a ‘get-rich-quick’ proposition but the Feed-in Tariff is still an incentive worth having, with payback periods of 10-12 years still possible.

What’s next? ‘Green Deal’…