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What the proposed cuts in solar PV feed-in tariff mean for you (updated)
Posted by Cathy Debenham on 1 November 2011 at 7:29 am
The government proposes to cut the rates of the feed-in tariff for new solar PV installations as follows:
Up to 4kW: 21p / kWh (previously 43.3p for retrofit / 37.8p for new build)
>4-10kW: 16.8p (previously 37.8p)
>10-50kW: 15.2p (previously 32.9p)
>50-150kW: 12.9p (previously 19p)
>150-250kW: 12.9p (previously 15p)
>250kW-5MW: remains at 8.5p
These are all designed to give a 5% return on investment for a well-sited installation, except for the 4kW and below rate, which is intended to give a 4.5% return.
When will the cuts happen?
All installations with an 'eligibility date' on or after 12 December 2011 will receive the current rate until 31 March 2012, and then reduce to the new rates from 1April 2012, and continue at the reduced rate for the remainder of the 25 year period. The date of 12 December is subject to consultation, and so may change, but as the consultation does not close until 23 December 2011, and decisions will not be made until after that, it would be risky to assume that it will change.
Installations from 1 April onwards will get the 21p rate (index linked) for the full 25 years.
Installations with an eligibility date before midnight on 11 December 2011 will get the current rate (43.3p for up to 4kW).
How do you define 'eligible' for the feed-in tariff?
This is the date from which an installation's eligibility for the feed-in tariff starts. It is the later of the date:
a) that your system is commissioned (by your installer)
b) that your feed-in tariff supplier (energy company) receives your valid written application for registration (this must include your MCS certificate).
Given the time pressure involved, it makes sense to contact your chosen FIT supplier in advance of your installation, to make sure that you know what its requirements are, and when it needs to receive your application to guarantee your installation is eligible.
We also recommend that you post it recorded delivery, and send a copy by email. (read about other people's experiences with FIT eligibility dates here).
I don't think we can meet the deadline, but I've already paid a deposit. What can I do?
Which? advises that those who have already signed contracts and paid a deposit should take legal advice on the specifics of the contract and check cancellation terms. It will also be pushing the government to try and ensure that all of you who have signed a contract on the basis that you would receive the current, higher feed-in tariff rate, are protected - and won't lose out if there are delays. (We will be adding our weight to this call too).
Under the REAL code, all MCS accredited installers must offer a seven day cooling off period. You are entitled to a full refund outside that 7-day period if they agreed the contract on the basis of false or misleading information, or if the technical survey advises changes be made to the installation, or if there is a significant change to the contract, such as a delay in the installation date.
We suggest you contact your installer as soon as possible to find out whether or not they can install, and provide all the necessary paperwork, in the six week period available.
I've signed a contract for a rent a roof (free) solar installation. Will that be affected.
You'll need to contact your installer to find out. The rates for multi-installation schemes like this have been cut even harder than the standard rates, and industry leaders are saying that their business model will no longer be viable.
Are there any conditions to getting the feed-in tariff?
The government is intending to "ensure that solar PV is considered as a part of a whole-building approach that prioritizes energy efficiency". It is proposing that all new solar PV installations with an eligibility date on or after 1 April 2012 will only be able to receive the full tariffs (see proposed rates above) if the owner can demonstrate that the building meets a certain standard of energy efficiency. If they can't they will receive a lower rate of 9p per kWh.
DECC has proposed two alternative ways of measuring energy efficiency, and is seeking views on which to adopt. They are:
a) bring the property up to an energy performance certificate (EPC) rating of C or above;
b) undertake all the measures that are identified on an EPC as potentially eligible for Green Deal finance.
As a transitional arrangement, installations with an eligibility date between 1 April 2012 and 31 March 2013 will have 12 months from the eligibility date to comply.
Does where I live affect the return that I will get?
These rates cover England, Scotland and Wales. However, as the calculations used by MCS to calculate a system's potential generation do not take into account where you live, those who who have a good site in the south will generally get a higher rate of return than those with a similar site in the north.
I already get the feed-in tariff. Will my rate be reduced too?
No. Systems that are already registered will continue to get the same rate of feed-in tariff, index-linked, for the remainder of their 25 year period.
Why are they cutting the rates now? I though they weren't going to change until April 2012.
DECC left itself a window of opportunity to change them before April if it deemed the need to be urgent. There is a fixed pot of money for feed-in tariffs during the spending review period to 2013/2014, and it is quickly running out, as solar PV has taken off significantly faster than anticipated. In addition, the costs of solar PV have fallen, so the rate of return is much higher than the 5% originally planned.
I'm trying to get a community project off the ground. Will it be affected by the changes?
DECC is considering whether to introduce a community tariff for "genuine community schemes". It will cover this in the second consultation on the feed-in tariff, which is due at the end of the year. In the meantime, it welcomes your views on this, and whether a definition of community scheme is required, and if so, how this should be defined.
Are these changes definite?
No. They are being consulted on, and may change. However, it's probably wise to assume that they won't change that much when you are doing your calculations.
I'd like to respond to this consultation. How do I do it?
Download the consultation on feed-in tariffs for solar PV document here. You can answer as many or as few of the questions as you wish. The closing date for responses is 23 December 2011.
Photo by CarolynBy Cathy Debenham
If you have a question about anything in the above blog, please ask it in the comments section below.
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