Installing Solar PV panels
The Feed-in Tariff Scheme was introduced in April 2010.
Despite the Government slashing subsidies by 50% in April 2012 and payment rates being reduced by at least 3.5% every 9 months, Solar PV remains an attractive investment.
Clean Energy Cash Back
Installing Solar PV panels through the FIT scheme provides 3 financial benefits
1. Generation Tariff – get paid for the electricity you generate, even if you use it yourself.
2. Export Tariff – get paid for surplus electricity you export to the National Grid.
3. Lower electricity bills.
Are you eligible for the scheme?
FITs are available to everyone – businesses, landlords, local authorities and households.
The scheme applies to installations with a generating capacity of 5 megawatts (MW) or less. This includes roof mounted solar PV, ground solar farms and wind turbines.
You will only qualify if the product and installer are certified under the Microgeneration Certification Scheme.
Since April 2012, domestic and non-domestic buildings must have an Energy Performance Certificate rating of level D or above to receive the higher FIT tariffs.
How the FIT scheme works
1. Select MCS accredited equipment and installer. The installer gives MCS certificate to the applicant FIT Generator.
2. The FIT Generator applies for accreditation to the FIT Licensee – ie its electricity supplier (if 50 kW or less) or Ofgem if over 50kW. The FIT Licensee checks that the generator is eligible for the FITs scheme and the installation gets added to the Central FIT register.
3. The supplier pays the FIT Generator a Generation Tariff for any electricity generated and, where applicable, an Export Tariff for any surplus electricity exported to the Grid.
Subsidy cuts
When the FIT scheme was launched in April 2010 the Generation Tariff was 43p p/kWh. The average return on investment was 7-10% and FIT generators received a guaranteed payment of 25 years tax free.
The Generation Tariff rates were halved by the Government in April 2011 from 43p to 21p. This resulted in a 90% drop in new installations.
In August 2012 the rates were reduced again from 21p to 16p and the length of term was reduced from 25 to 20 years. With cheaper solar panels this still provided a return of 6%.
Since November 2012 tariff rates are assessed by Ofgem every 3 months and cut or held depending on the amount of installations. There is a minimum of 3.5% degression for Solar PV every 9 months.
The Export Tariff will however increase over time.
Current Tariff Rates
Solar PV – After 1 July 2013 and Before October 2013 (4 kW or less)
Generation Tariff – Higher Rate 14.90 p/kWh
Generation Tariff – Lower Rate (EPC below D) 6.85 p/kWh
Export Tariff – 4.64 p/kWh
Where does the money come from?
Payments are made by utility companies and the costs are then passed on to all energy users bills.
The Government has estimated that energy bills will rise by £80 in 2020 to pay for the FIT Generators.
Is it worthwhile to invest in solar PV?
There are over 35,000 new Solar PV installations in the UK every month.
Investing in solar PV is worthwhile if
1. You can afford the installation costs (approx. £5,000 for an average 2.5kW system) or you have the benefit of a solar finance option – see below
2. Ideally your roof is south facing, and
3. Your building has an EPC energy efficiency rating of D or better
There are concerns that panel costs will increase. The European Commission is currently undertaking a review of Chinese PV imports under competition “dumping” rules which could lead to a 50% increase in Chinese panel prices.
The EC delivers provisional findings on 6 June.
Interested in finding out more?
There are various finance options available in the market to customers. For example in the commercial sector where the energy savings and FIT income offset the finance payments.
If you are a business or local authority, we recommend that you approach an energy consultancy such as ENVOS, who work with installers nationally.
http://www.envos.co.uk/services/renewable-energy-system.html