Householders who are in the process of having solar panels put on their roof have less than six weeks to complete the job or face seeing the predicted income they generate slashed after the government said it was cutting feed-in tariffs by 50%. Despite pledging to be “the greenest government ever”, the coalition have announced that only installations completed by 12 December will get the full payments they were promised. Hundreds of householders who have signed contracts to have panels fitted have now pulled out and others are expected to follow.
More worrying, is a proposal to make future feed-in tariff (Fit) payments dependent on the home meeting tough energy performance standards. Around 85% of UK homes would need to spend around £5,600 to meet the requirements. Such a move, which is subject to the consultation exercise announced by ministers, would kill the solar industry.
Under the original scheme, householders had been promised the higher Fit payments provided they installed their panels before 1 April 2012. Since the scheme’s introduction in 2010, around 100,000 householders have taken advantage of the generous terms. Last week’s cuts have already led some in the renewables sector to predict the end of the solar industry, which employs 25,000 people.
At least two legal challenges have been threatened,including one by Friends of the Earth, if the government doesn’t back down on the 12 December deadline. A protest is also set to hit Westminster on 22 November, though with the industry now working round the clock to complete ongoing installations, no one can afford to take time off to attend, even though it looks as though many one-man companies that spent thousands of pounds training to become accredited installers won’t be around in 12 months’ time.
So what do the changes mean?
• The feed-in tariff payable on installations of up to 4kW used to attract a generation rate of 43.3p per kWh. This will be reduced to a proposed 21p for all installations with an eligibility date on or after 12 December – unless the government relents voluntarily, or is forced to by a legal challenge. This slashes their viability; the financial return on the investment falls from around 12% to 5%-7%.
• If you complete your installation between 12 December and 1 April, you will get the new Fit of 21p, but won’t have to conform to any energy efficiency measures.
• Perhaps the biggest change, and the one that has attracted the least publicity, is the plan to make the payment of Fits dependent on other energy efficiency measures. Ministers have indicated they want only homes that have an energy performance certificate rating of C or better, ruling out many homes, as it will be prohibitively expensive. Most pre-1919 homes require the installation of some or all of the following measures: loft insulation, cavity wall insulation, heating controls, hot water cylinder insulation, replacement boiler and solid wall insulation – at a typical cost of £5,600.
• The proposals are also expected to put an end to free solar installations (often called “rent-a-roof” schemes) through a new multi-installation rate – where an individual or company receives Fits from more than one installation. They will get just 16.8p per kWh for systems up to 4kW, a rate which makes the business no longer worth pursuing.