Dramatic Changes are being proposed to Renewable Energy Subsidies (the Feed-in Tariff) from early next year.
The Government are proposing to slash their payments to owners of electricity-generating renewable energy technologies by almost 90% from 1st January 2016. If the cut goes ahead, the feed-in tariff payable to the owners of solar panels will be reduced from the current rate of 12.92p per kilowatt hour to just 1.63p. The industry is therefore urging those seriously considering installing solar panels or a wind turbine to do this while the rate remains relatively generous.
Although the current feed-in tariff rate is significantly lower than it used to be, the installation of solar photovoltaic panels this year could still prove a worthwhile investment. Based on this year’s rate, a typical 3.5 kilowatt hour system costing around £7,000, on a south facing roof with no shade, will generate around £586 a year from the tariff. This means the system will pay for itself in around 12 years leaving 8 years of clear profit under the tariff. Admittedly this is a significant reduction to the pre-November 2012 rate where such a system would could pay for itself in around 7 years.
Leading figures in the industry have slammed the government’s proposals and warn of a ‘wholesale collapse of the UK renewable market’. Panasonic, a major supplier of solar panels in the UK, has stated that it normally avoids intervening in political decisions but would not stand by to see the industry attacked. The Department of Energy and Climate Change has defended its proposals as necessary to prevent budget overruns. The full DECC report can be read below. The Consultation period closes on 23rd October 2015.