News

After the long wait we finally know for sure the amount to be paid to producers of solar electricity under the clean energy cash back scheme. The result of a consultation process lasting 6 months, the initial outlook for solar energy in the UK is positive.

In comparison with the provisional figures released last year, there has been an across the board increase in the generation tariff paid per kWh for all sizes of installations. The table below shows the feed in tariff as they stand now;

Installation Size

Price paid for energy generated (p/kWh)

Lifetime

Year 1

Year 2

Year 3

4kW (new build)

36.1

36.1

33

25

4KW (retrofit)

41.3

41.3

37.8

25

4-10kW

36.1

36.1

33

25

10-100kW

31.4

31.4

28.7

25

100kW-5MW

29.3

29.3

26.8

25

Stand alone systems

29.3

29.3

26.8

25

There some important new features of the arrangement;

-         The export tariff (the amount paid when energy is fed into the grid) is reduced to 3p/kWh. This will increase the motivation for generators to use the energy for themselves since retail electricity prices are normally significantly more than 3p/kWh.

-         The lifetime of the FIT is 25 years. This is in line with other feed in tariffs around Europe and increases the attractiveness of solar (compared with 20 years) as it increases the security of the investment.

-         The feed in tariffs are linked to inflation. This means payments will increase over time in absolute terms. This is something that we had been campaigning for as ‘inflation risk’ is a significant worry that we have encountered in prospective solar producers.

-         The feed in tariffs can be legally assigned to any party. This allows room for innovative leasing models that are popular in Europe and the US where the either a third party leases roof space or a home owner leases the solar panels system.

Our initial calculations show that this level of tariff should result in 7-8% annual returns for homeowners retrofitting PV systems under 4kW. This means solar will compete with the best investment funds out there for investors pounds.

For Solarfeedintariff.co.uk this announcement represents a positive move by the government. It shows that during the consultation process it has listened to voices in the solar industry (hopefully including ours) and taken note of what is happening in the rest of Europe. Germany has shown that microgeneration, in particular solar PV generation can contribute very significant amounts of the nation’s energy and that a feed-in-tariff is the best way to encourage this growth.

Claims that have recently been made in the press that solar panels are merely ‘eco-bling,’ exhibit complete ignorance of what is happening in the rest of the world. Unfortunately this is a common attitude in the UK, the last major European economy to implement a feed-in-tariff. Hopefully, now with the tariff announced, this will change. We fully expect strong growth in the UK solar industry. This is a good day for Britain and our hopes of achieving our emissions targets.

Stay tuned for more updates.

6 comments

steve

February 2, 2010

Thats great!
Couple of questions though.

1) I assume the 1,2,3 columns are for when you take up the FIT / start on the FIT scheme?
i.e. start this year you get 41.3, start in 2 years time you get 37.8p

2) the fact that you want to use as much of the electricity you generate as posible calls for some kind of device that will monitor the production vs usage, and will turn on when there is “spare” electricity coming from the PV.
e.g. you could have eletric heaters / kettle etc plugged into it, and it will come on when it detects some spare capacity.
Does something like this exist?

Brian

February 2, 2010

Within this scheme is a kick in the teeth for early adopters. If an installation was operating prior to July 2009 and not already in the RO scheme they are excluded from receiving FIT payments. So all those people out there who have been ‘doing the right thing’ for a while whilst the legislature has been dragging its feet are to be financially disadvantaged. Well done DECC, you have just taught us all it doesn’t pay to use our initiative !

Rob Macarthur

February 3, 2010

In answer to you question 1 – the answer to that is no – if you install in year one when the tariff is 41.3 that will be your feed in tariff rate (linked to inflation) for the 25 year duration.

From DECCs own consultation document;
Degression
3.86 Degression is where tariffs for new projects are reduced annually to reflect, and to some extent encourage, expected decreases in technology costs, and is a feature of international best practice. Degression applies only to new projects: existing projects remain on the tariffs that they have been previously assigned and are unaffected by degression. We propose degression rates in line with expected technology cost reductions for different technologies at different scales. This gives the technology supply chain industries an indication of the cost reductions that will need to be achieved so that the tariffs can still deliver a sufficient return to encourage investment from potential generators.

Graham

February 6, 2010

Is there any indication as to whether payments received under the FIT scheme are counted as a taxable income ? Suppose I pay £1,200 per year for my domestic electricity (I have electric central heating), I install a solar PV system and get back, say, £1,000 per year under the FIT. I’m not making a profit – but HMRC might say that £1,000 per year is taxable income and want £400 extra income tax (for a 40% tax payer). The issue of tax could extend a pay back period from 12 years to 20 years for a solar PV system. Is there any definitive answer on this issue ? If I ask HMRC they are likely to give an answer which maximises tax rather than looking at the benefit of the scheme.

Martin

February 23, 2010

Does anyone know weather it is based in a law and in which? is it perhaps the Energy Bill 2009-2010 which has gone through 2 readings in house of commons, available here?

http://services.parliament.uk/bills/2009-10/energy.html

if it is this one, can it change in 3rd reading or in the house of lords?

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April 9, 2012

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