What are the implications of the government FIT review consultation for those thinking of installing solar panels?

In a controversial move which surprised the industry, the government announced proposals on Monday that from the 1st of April 2012 the current Feed-in Tariff level for solar PV installations below 250kW will not be paid for any projects registered after the 11th of December 2011.

Those registered after that date will receive a new, lower-level of support from the 1st of April. Solar PV installations registered before the 12th of December will not be affected.

For domestic-size schemes, it is proposed to reduce payments from up to 43.3p per unit to 21p for sites of 4kW or below. Domestic installations completed after the 1st of April 2012 may also require an Energy Performance rating of C or above to be eligible for the full Feed-in Tariff payment.
 
So where does this leave our customers’ who’ve been thinking of installing solar PV to cut their carbon emissions – and were hoping to earn a good financial return too.

If you have already installed solar PV …

People whose solar PV installation is already registered will not be affected by the review – they will continue to receive the current rate, index-linked and guaranteed for 25 years.

If you have a PV project underway …

If you have a solar PV project underway but not yet completed and registered, you will need to do so by the 11th of December. According to the department of Energy and Climate Change, schemes up to 50kW must be commissioned (in working order) and have had their request for accreditation received by a Feed-in Tariff licensee, such as Good Energy. Any installation whose application is received after midnight on the 11th of December 2011 will be subject to the lower rate of Feed-in Tariff from the 1st of April 2012 onwards.

If you are still interested in installing solar PV to generate your own renewable electricity…

If you have not yet accepted a quote, now is a great time to be researching the options and making sure you make the right decision on renewable generation.

• Costs for solar panels have fallen sharply in the last year, and are expected to continue falling.  After the deadline of the 11th of December it may well become a ‘buyers’ market’ as consumer interest in installing solar PV is likely to fall sharply. Under the Government’s Feed-in Tariff consultation proposals, the average family household (a three-bedroom domestic property) who installed a 2.5kWp solar PV after the 11th of December 2011 could earn an income of almost £500 from the Feed-in Tariff. They could also save up to £150 per year in electricity bills, depending on the pattern of their energy usage.   
• As long as the UK continues to rely on imported energy, electricity bills are expected to keep rising (although Good Energy has not increased ours for over three years, and plans to hold them until 2012, hopefully longer). In the long term, micro-generation should provide some shelter from price rises to hard-pressed consumers, and help with energy efficiency.
• A number of new solar installation businesses sprang up off the back of the initial higher Feed-in Tariff rates, and some are expected to go out of business as a result of the FIT cuts. We recommend that you find a solar installer who is committed to the business for the long-term. Get at least three quotes in from reputable installers and verify any testimonials given. In order to qualify for the Feed-in Tariff, installers and the products they install should be certified under Microgeneration Certification Scheme (MCS). Good Energy can put you in touch with recommended, ethical installers.
• From the 1st of April 2012, the Government is proposing that households will only be eligible for the Feed-in Tariff rate of 21p if their homes have an Energy Performance Rating of C or above, or they have taken up all the measures potentially eligible for Green Deal finance, otherwise they will get just 9p. There will be 12 months ‘grace period’ to comply with the energy efficiency requirement. We recommend you make your home as energy efficient as possible in any case, but recognise that for older properties in particular this is not always easy. If you think it is unlikely your home would qualify for an EPC rating of C or higher we suggest you aim to get your system installed before the 1st of April.
• Visit the Good Energy website to take advantage of our online assessment survey. Our expert advisers will be able to provide the best options based on simple information you upload.

Good Energy customers who have installed their own solar PV (the ‘mini power stations’ of the future) report a drop in domestic energy consumption from a combination of learning the best way to use their own electricity and increasing energy efficiency. Nearly one quarter claim to have cut consumption by more than 20%. This demonstrates Good Energy’s belief that those who understand where their energy comes from value it more and use it less.  Despite the cut in Feed-in Tariff rates, now is still a good time to join the ‘homegrown’ energy revolution.