Energy News

Dash for solar panels as tariff slashed by over 50%

Thursday 03 November, 2011

By Martin Fagan

Households installing solar panels after 12 December will be paid 50% less for the power they generate

The government’s announcement that it is slashing the feed-in tariff on solar energy has caused a rush to install solar panels before the 12 December deadline.

After that date, the government will reduce the feed-in tariff to 21p per kilowatt hour (kW h) from the current 43.3p per kW h plus an additional 3.1p per kW h for energy exported to the National Grid.

The feed-in tariff pays solar panel owners for the electricity their panels generate, regardless of whether the energy is used by the household or fed into the National Grid.

According to figures from the Energy Saving Trust (EST) and based on the old tariff, this means a typical return of £1,190 a year. All returns from the feed-in tariff are tax-free.

Only those who have panels physically installed and registered before 12 December will be paid the higher rate. This has led to a rush to have panels installed before that date, with many installation companies struggling to meet the increased demand.

The feed-in tariff scheme has been a victim of its own success, with far more people signing up than was anticipated. However, the tariff cut has received a muted welcome from energy efficiency organisation the EST.

“The new proposed rate can still make installing solar panels a good proposition and it’s important that consumers and industry know that feed-In tariffs continue to have a future,” said Karen Lawrence, director of delivery for the EST.

“We absolutely support the view that householders’ homes need to reach a required level of energy efficiency in order to benefit from the new feed-In tariff rate. There’s little point in producing green energy if it’s all lost through walls and roofs.”

Despite its pledge to renewable sources of energy, the government has defended its decision to cut tariffs on the basis that the cost of installing solar panels has dropped by around 30%, from an average of £12,000 to £9,000.

Furthermore, the feed-in tariff is subsidised by other consumers, with a green levy added to energy bills. The government has pledged that this will not be more than £23 a year by 2020, so says it has to reduce the tariff rate to meet this cap.

Photo by Jon Callas