Breaking News – Feed-in Tariff Changes Confirmed

After weeks of uncertainty the Department of Energy and Climate Change (DECC) have today announced the results of the consultation on Solar Feed-in tariffs. Here’s a brief overview of the changes which will come into effect from 1st August 2012:

  • Generation  Tariff for systems up to 4kWp will be 16p / kWh (currently 21p).  See table below for other rates.
  • Export Tariff will increase from 3.1p / kWh to 4.5p / kWh
  • Feed-in Tariffs will now be guaranteed for 20 years rather than the current 25 years.
  • Tariffs will still be index linked to RPI
  • Future Tariff reductions will be quarterly at a rate of 3.5% and will be linked to deployment i.e. if the market slows beyond certain thresholds, reductions may be delayed.

Greg Barker in his statement to Parliament said: “I want to send a very clear message today. UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence.”

The new tariffs will deliver a return on investment of around 6% for domestic/small commercial installations and up to 8% for larger systems which is in line with how the scheme was initially set up in April 2010. 

So it’s good news for the Solar industry in that we finally have clarity and a subsidy scheme that we can work with for the long term.

Band (kW) Standard generation tariff (p/kWh) Multi-installation tariff (p/kWh) Lower tariff (if energy efficiency requirement not met) (p/kWh)
•4kW (new build) 16.0 14.4 7.1
•4kW (retrofit) 16.0 14.4 7.1
>4-10kW 14.5 13.05 7.1
>10-50kW 13.5 12.15 7.1
>50-100kW 11.5 10.35 7.1

July Cut to Feed-in Tariff Delayed

News filtered out at the end of last week that the next cut in feed-in tariffs scheduled to take effect from 1st July has been delayed.  Indications are that the new rates, which have not yet been published, will not now come into effect until 1 August which is great news for our customers.  Installations across the country have been much lower than anticipated since the last cuts came into effect on 3rd March this year and it sounds like DECC are listening to feedback from installers, hence the delay.  The next round of cuts will still come but maybe they won’t be as harsh as the proposal?  We won’t know until the final results of the consultation are published. 

One thing that is guaranteed though is that now is as good as it’s going to be in terms of return on investment for a PV system.  With the current feed-in tariff rate at 21p for up to 4kWp and kit prices at an all time low, return on investment is still working out at 10-12% on average.  So if you are still thinking about installing a system, call us today on 01525 213103 for a free quotation.  We may have an extra 4 weeks but the clock is still ticking on the current deal!

Change in Planning Rules for Non-Domestic Solar Systems

Great news for commercial property owners and public sector organisations who are thinking about Solar PV. Following a review of Permitted Development Rights, planning permission will no longer be required for non-domestic installations providing certain conditions are met:

  • Roof-mounted Solar systems must not protrude more than 200mm from the roof/wall surface it is mounted on.
  • On a flat roof, the system must be less than 1m in height above the highest part of the flat roof, excluding any chimneys.
  • Any roof mounted system must be more than 1m away from the external edge of the roof.
  • If the property is situated in an area of outstanding natural beauty or conservation area, the system cannot be facing onto a public road.
  • Ground mounted systems  up to 9m2 and 4m high are permissible providing they are installed no less than 5m from the boundary and no nearer to any road than any part of the property’s building(s). 

There are other general conditions around making sure any proposed system has a minimal effect on the amenity of the area.  Planning permission is still required for listed buildings though as you might expect.  The new rules came into effect on 6th April.

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.

New Year For Solar PV Panel Installations

So 2012 is here and with it comes new oportunities to see significant savings on our household energy bills. Solar PV panels still promise to offer an excellent return on investment even after the feed-in tariff cuts and I feel the the market will change  mostly for the better. There is no doubt that after a record number of Solar Panel installations were completed by the Dec 12th deadline the market has cooled considerably. The capital costs of  Solar PV panels has already come down even further to compensate and as a result an installation well designed and installed can still now achieve up to 10% annual return on investment . In this new year of the reduced feed-in tariff  it will now be more important than ever that a solar panel project has a sound design based on correct matching of panels to the right inverter, keeping cable losses to a minimum, using quality products with warranties that will last beyond the feed-in tariff, and most importantly detailed site surveys with proper shading analysis. It will no longer be possible to get a good return from poorly positioned systems with shading issues. This year will see many less reputable installers give up and move on to the next big thing leaving the best in the industry to innovate and build better ongoing client relationships.  We’ll see quality installations delivering on estimated yields and with intelligent monitoring that allows consumers to maximise savings on their current energy bills. Entirley from an asthetics point of  view I hope this year we will also see the end of the shockingly awful solar panel installations that look like they have been thrown on the roof! Whilst completing our installations we have unfortunatley seen many in Milton Keynes, Bedford, Luton and Dunstable on nearby properties that are not straight, are overhanging the roof edge, have rails sticking out the side for over a meter and cables flapping about in the wind or in the gutter and even panels permanently shaded.   Fewer shoddy installations, a good return from a sensible feed-in tariff and lower capital costs all add up to a good year in 2012 for solar PV.

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’…

First School Solar PV Installation

This week marked the first school Solar PV installation for Morgans Electrical at a primary school in North London.
This is an 8.1kW system (45 modules) using Sharp 180W panels. The system is going to generate approx. 6655kWh of electricty per year earning them £2400/yr in feed-in tariff and saving over £650 on their electricity