As the Government’s solar energy Feed in Tariff is reduced to 21p per kilowatt generated, and the 2012 deadline brought forward; consumers have been left confused as to what this means for the future of solar energy in the UK.
Save Energy Renewables, part of the Save Energy Group, has been in the renewable energy sector since 2002, long before the government feed in tariff was introduced in April 2010. The introduction of the tariff, at 41p per kilowatt generated, was designed to kick start the take up of renewable energy in the UK and bring us in line with leading European countries such as Germany. In its second year the tariff increased to 43.3p, but was widely regarded by the industry as high and unlikely to sustain.
The tariff is reviewed on an annual basis and was due to change again from March 31st 2012, with much speculation as to what that might be. The announcement came on the 31st October that the new figure would be reduced to 21p, however, what the industry was not expecting was the 12th December 2011 cut off point – fast-tracked from the original 2012 deadline. Therefore, only solar PV systems installed and commissioned by this date would be eligible for the 43.3p tariff. This put an unprecedented strain on the renewable energy industry, and will almost certainly result in many smaller companies, or those with a less than perfect infrastructure going out of business.
As to why this date was brought forward, lies heavily in the surge for ‘free solar’ with companies setting up to take advantage of the tariff by renting roof space from consumers who benefited from reduced energy bills, while they reap earnings from the tariff for the next twenty five years. The budget put in place to assist homeowners simply ran out.
The new tariff rate of 21p is now set at a sustainable level for the long term. It will ensure the tariff is available for its predicted lifespan, until the cost of the energy rises to meet the percentage that can be earned through the tariff – namely grid parity. Steve Randall, Sales & Marketing Director: “This is extremely good news and represents a very healthy 8-10% increasing return on investment for those who choose renewable energy as the way forward. It also represents twice what can be achieved by the high street banks. As a business we count ourselves among the lucky ones, with a strong infrastructure both logistically and financially. As we have been in the business for over a decade we also have strong buying power with suppliers, savings we can pass to our customers.”
Solar energy has been embraced by the UK for many years due to the inevitable savings on energy bills. The fact that the cost of energy will only rise will see consumers continue to do so with the added benefit of the feed in tariff which is all the more attractive here in the South which enjoys far longer hours of daylight than the North.
Steve Randall concludes: “The best way for consumers to judge whether solar energy is for them is to look at their electricity bill today, and multiply that by the life of the tariff which is twenty five years. The option is rent your energy at a rising cost per year, or take ownership of it today. There is further good news in the marketplace as we have seen product prices lower and level out, so when visitors come to our showroom we are able to share more attractive pricing terms.