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Feed-in tariff rates for solar PV reduce today - but still offer good value

Posted by Cathy Debenham on 1 August 2012 at 9:29 am

The feed-in tariff rates for solar PV fall today. This is part of a planned degression, which aims to keep the rate of return more or less the same, as prices within the industry fall.

For installations from today the rates will be:

4kW or less: 16p per kWh (6.3% return on investment)
>4-10kW: 14.5p / kWh (7.2% ROI)
>10-50kW: 13.5p / kWh (7.2% ROI)
>50-150kW: 11.5p / kWh (6.8% ROI)
>150-250kW: 11p / kWh (7.4% ROI)
>250kW-5MW: 7.1p / kWh (7.9% ROI)
Stand alone: 7.1p / kWh (4.6% ROI)
Tariff paid for 20 years. Export rate: 4.5p
NB: buildings without an Energy Performance Certificate (EPC) of level D or above will get the stand alone tariff (see here for more details).

The return on investment figures above are based on calculations by the Department of Energy and Climate Change (DECC). You can see its methodology here.

The Solar Trade Association, which announced yesterday that it is developing an ROI calculator for its members believes that the DECC figures are conservative, and predicts a 9.2% return over the 20 year life of the tariff for a 4kW solar PV installation costing £8,000. Using the "real-world rate of increase in electricity prices" in their calculation would increase returns on investment to 11.4%.

The Renewable Energy Association calculates that the average annual increase in electricity bills for the period 2005 to 2011 was 6.6% above inflation.

"Our figures show that solar is a no-brainer investment," says Paul Barwell, CEO of the Solar Trade Association. "Compared to the returns you can get these days in banks and many other investments, solar provides a very solid and attractive return. That is particularly the case if you consider energy bills are rising faster than anyone expected."

Photo by Niels Sienaert

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