If you’re having trouble keeping up with the latest news on the government’s feed-in tariff, you’re not alone. As there’s a general lack of clarity on the current situation, we thought we’d take the opportunity to bring you up to date and explain how the likely outcomes may affect you.
There’s been much confusion lately on the topic of the feed-in tariff. Yet in actual fact, the message for new customers is simple. Install by 31 March, and the rate you receive is guaranteed to be no lower than 21p per kWh. When you consider that panel prices are coming down, this gives a substantial return of up to 10%. There’s also a chance that your rate may be raised to 43.3p per kWh depending on the outcome of an appeal by the Department of Energy & Climate Change (DECC). Either way, you’re guaranteed a good deal, as long as you act quickly.
A bit of background
You may remember that on 31 October DECC revealed proposals to halve the 43.3p feed-in tariff for domestic properties to 21p per kWh. There was a general consensus in the industry that the cut was necessary in order to make the most of the allocated funding and help as many people as possible benefit from solar energy.
However, the proposal angered some solar leaders and environmental campaigners because the cut was brought into effect on 12 December 2011, before the official consultation period had ended. The case went to the High Court, and on 21 December, Mr Justice Mitting upheld the challenge, ruling that bringing the cut into effect two weeks before the end of the official consultation period wasn’t just unreasonable, it was illegal.
The ruling was hailed as a victory by some members of the solar industry, with others fearing that prolonging the uncertainty simply served to damage the industry further.
Fresh controversy ensued when the DECC decided to appeal against the High Court decision. Outlining the grounds for the appeal, a DECC statement argued that the High Court ruling had been based on the view that cutting the tariff would defeat the object of the scheme – to encourage the small-scale generation of renewable energy.
DECC disagreed with this premise, stating: ‘The overriding aim of the proposed reduction in tariffs for solar PV (as set out in the recent consultation) is to ensure that over the long term as many people as possible are encouraged to install small-scale low-carbon generation (including other technologies as well as solar PV) and benefit from the funding available for the FIT scheme.’
Climate Change Minister Greg Barker defended the government’s decision to appeal, warning that the feed-in tariff scheme had already exceeded its budget for the current financial year.
The Court of Appeal has set 13 January as the date for the ‘rolled-up’ appeal hearing, meaning that the application for permission to appeal and the appeal itself (if granted) will take place that day. The results will then be announced the following week.
So, what does all this mean for customers? As we summarised at the start of this article, the simplest way to look at it is that, for now, the feed-in tariff rate new customers will get is 21p. This means solar is still a great investment, and with the overall cost of installing now coming down, it will yield returns of 8-10%. It’s also worth noting that energy prices are at an all-time high and set to keep on rising. Those with solar installations will see their bill savings increase in line with electricity costs.
If the government is denied permission to appeal, or loses the appeal, then the 21p tariff could be temporarily reinstated to 43.3p. Either way, you’ll get good returns if you install before 31 March – just don’t bank on the higher rate.
After 31 March, things are a little more uncertain. We’re optimistic that the 21p rate will continue, although homes may be required to reach a minimum energy efficiency standard in order to qualify. That’s another reason why it’s a good idea to install sooner rather than later.
What nobody in the industry wants to happen is a boom-and-bust scenario. While a return to the 43.3p tariff could be viewed as a short-term victory – and would result in a small number of very happy customers – this could cause a further deeper cut to the tariff soon after.
Whatever the outcome of the appeal, EvoEnergy will remain strong believers in the future of solar energy in the UK. Our customers are our priority and we’ll do all we can to help homes and businesses benefit from generating their own renewable energy – now and for years to come.
Update: 16 January, and still waiting
Friday 13 January, and the entire UK solar industry waited to hear the result of the DECC appeal against the High Court ruling on the feed-in tariff.
Hours passed, and the statement that did materialise only added to the growing frustration. No decision had been reached, the case would linger on, and we could have to wait weeks for the next instalment of this ongoing saga.
A statement on the DECC website reads: ‘The Court of Appeal has not yet decided whether to give permission for an appeal or made a judgement on the FITs case. The Court will wrap up the decision on permission for an appeal and a possible judgement if an appeal is allowed in the next few weeks. Once the outcome is known we will consider our options and make an announcement on the way forward to provide clarity to consumers and industry.’
Until then? Install before 31 March and you’re guaranteed to get at least 21p per kWh, which still makes for a good investment. There’s a chance that the rate could increase to 43.3p, but don’t let that be your only reason for going ahead. Think about the other, long-term benefits of solar, and install now if you’re happy with 21p. You might get more than that if you’re lucky, but leave it too long and there’s a chance you’ll get less.