FIT Cuts for Solar PV: Fact Or Fiction?
Author: Amy Catlow
Published: Friday, 28 October 2011
For a while now the UK press has been spreading rumours that the Feed in Tariff rates for microgeneration-level solar energy will be drastically cut. Many were predicting a slash from the current level of 43p per kilowatt hour to 9p.
The trade played its part in the scaremongering with some of the large energy companies using the rumours to emphasise the urgency of getting locked into the Feed In Tariff before the 2012 deadline. So is this just typical media hysteria that we’ve come to expect as a forerunner to a review of this nature, or an accurate prediction of what the future holds?
Just a few months ago Guardian Money claimed “A 20%-25% collapse in the price of rooftop solar power units in recent months has turned the Government's Feed In Tariff scheme into one of the most lucrative financial propositions for households with the right sort of property.”
Those who have the money available to pay for the solar PV system outright and a suitable south-facing roof are seeing huge benefits with the Feed In Tariff. It can be expected that a 2.5kWp installation costing around £11,000 could provide the owner with a typical annual income of £900 and a £140 a year saving due to a reduced electricity bill. As payments are guaranteed for a period of 25 years and rise each year in line with inflation, it’s clearly a very attractive way to invest money.
FIT also has its critics in the form of those who will not or cannot take the Government up on their incentive. They protest about having to pay a green tax via increased utility bills in order to fund these investments. This is made worse by certain newspapers bandying figures of £200 per household per year. The regulator, Ofgem, recently revealed the actual figure to be £70 per year per household, which is considerably different.
On the one hand we have David Cameron pledging to lead the greenest ever government and on the other, Greg Barker, the Minister of State for Energy and Climate Change struggling with balancing the UK’s solar ambitions with a budget he doesn’t feel is up to the job – that’s if his recent discussions with Solarcentury’s Jeremy Leggett on Twitter are anything to go by.
If ministers do decide to slash FITs from next April as drastically as the rumour-spreaders are saying the fear is that it could be the death knell of an industry that is just in the throes of becoming highly efficient. No doubt we will be hearing a lot more about this in the coming weeks but for now we should remember that rumours of severe cuts to FITs are just that – rumours.