In a nutshell, the Government wants to adjust the pricing structure of its FITs scheme, but has been overruled in court by an opposition led by Friends of the Earth, who are trying to get the best deal as an incentive to switch to sustainable energy. Any potential changes will affect only FITs applications received after December 11th 2011.
The Government is currently appealing the court decision.

The FITs scheme

The FITs (Feed-In Tariff) scheme was introduced by the government last April (2010) to encourage organisations to choose greener power.
The idea was that they could sell energy they generated themselves to electricity suppliers, and also sell back to the grid.
This home-made energy was initially valued at 43.3p/kWh.
If you’re an early bird who installed a sustainable energy system before 12th December 2011 your energy will remain at 43.3p/kWh for 25 years.

Developments last December

The Government proposed changes to the FITs rate that will affect the whole UK. What this means is that your homemade energy could be worth less if your application was received after the reference date (12th December 2011), the effect being that your sustainable energy system will take quite a while longer to pay for itself.

If the Government’s court appeal is turned down

FITs applications received before 2nd March 2012 will qualify for the higher rate of 43.3p/kWh for 25 years.
Applications received between 2nd March and 31st March 2012 will also qualify for the higher rate but only until 31st March 2012, when they will adopt the lower rate of 21p/kWh.
On applications received from April 2012 onwards, the lower rate will apply.

If the Government’s court appeal is successful

Any FITs applications received before the 31st March 2012 will be eligible for the higher rate, reduced to the lower rate from the 1st April 2012.
On applications received from April 2012 onwards, the lower rate will apply.

How that translates in actual terms

On a 3kW system, with £10,000 installation costs:
The higher rate would give an overall yearly payback of £1240, meaning your initial investment is repaid in eight years.
With the lower rate, the overall payback is more like £670 per year, and it will take fifteen years to pay back your installation costs.

Advice for new installations

If you are thinking about registering for the FITs scheme you’re advised to assume you will be eligible for the lower rate.

A useful source of information is the Energy Saving Trust website, which is particularly clear and straight forward. The Department of Energy and Climate Change website also has a lot of information, but it’s more difficult to make sense of. The issue is still under appeal, so watch this space.