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Tag: Tariff Rates

Government to Slash Feed-in Tariff for Solar PV

Energy Saving Trust FIT review fact sheet

Fact Sheet on the proposed changes to Solar PV Feed-in-Tariff rates

Last updated 26 October 2011


The UK Government is proposing to reduce Feed-in Tariffs (FITs) for new solar photovoltaic (PV) installations as part of their comprehensive review consultation. See  www.decc.gov.uk/fits

If you install solar PV and your FITs application is received by your FIT supplier (also known as FIT Licensee) on or after 8 December 2011, you could be affected by the proposals.

Please note that these proposals are currently under consultation and are therefore not final.

However, we recommend customers should use the figures in the consultation if they are planning to install after 8 December 2011.

Only PV systems are covered by the UK Government’s current FITs consultation. Other FIT-eligible technologies will be considered as part of the second phase of the comprehensive review due to be published shortly.

Summary of proposals

The UK Government proposals which affect householders most are:

  • A reduced rate of 21p/kWh for solar PV installations <4kW – tariffs will be introduced from 1 April 2012 and will affect all installations with an eligibility date on or after 8 December 2011. See definition of eligibility date below. This tariff rate is designed to provide householders with a rate of return of around 4%.
  • New domestic energy efficiency requirements – from 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level C or above/which has completed all „Green Deal. measures. Where a domestic property does not meet these energy efficiency requirements, the Solar PV installation may receive a lower tariff.

The table below compares typical income and savings made for an average sized solar PV system in the UK along with simple payback period (cost divided by combined income and savings)

FIT Rates Total annual earnings and savings with a 2.9kW system Simple payback (years)
Current 43.3p/kWh £1,190 10
Proposed 21p/kWh £    640 18
  • 2.9kWp system, install cost of £11,500
  • Total earnings and savings include income from the generation tariff, export tariff on 50% of total generation and up to 25% of generation used on site.
  • Simple payback will depend on capital cost so the simple payback periods may vary depending on quotes received. Cost of solar PV has come down significantly over the years so we would expect the simple payback period to come down gradually.
  • Annual generation has been calculated as 853kWh/kWp using the Energy Saving Trust Solar Energy Calculator (see below) using the postcode SW1A 0AA (Westminster Palace)

To find out more about how this will be implemented, please download the full fact sheet:


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Turmoil over Feed in Tariff Rates Cuts for 2012

Businesses considering installing Solar PV are all rushing to install before March 2012, though for some even that may be too late.

At a meeting at the House of Commons today between industry representatives, the Government reiterated its position on the Comprehensive Feed in Tariff review.

Rachel Solomon-Williams, Head of the Feed-in Tariff Review confirmed today that the Comprehensive Review is underway in the Department of Energy and Climate Change (DECC), although she was unable to confirm details of when it would be revealed, or what the rates will look like.

It was however established that DECC has to operate within the Treasury-imposed, fixed envelope. It was made clear that if this budget overruns, the funding will need to come from DECC, for which, unfortunately, there is no budget.

She also reiterated that there are no planned changes before April 1, 2012 “unless earlier action is deemed necessary,”

And it is the fact that the Government consistently keep repeating that phrase at ever more frequent intervals that is causing major unease with potential customers.

After all, many still remember that phrase from the recent fast-track review, which ended in tariff rates as low as 8.5p for large scale projects, the concern is that all project over 10kWp could now also be affected and the rate drop  to a similar level.

Whilst the Government wouldn’t be pushed further, the chatter in the room and the corridors afterwards was that the most likely outcome was a 10% cut on the first band up to 4kWp, possibly the same up to 10kWp, a heavier reduction (and a new band) between 10kWp and 20kWp and a swingeing reduction for the 20kWp to 50Kwp sized systems. The chatter also suggested that the upper end of the cuts may be introduced as early as January 2012, in the same way that the Fast Track review effectively killed off all the projects over 50kWp, a rapid implementation of a >20kWp band would effectively kill off nearly all the commercial schemes currently under consideration, meaning that the only place left to install Solar PV was homes and small businesses.

Hence the rush to get systems installed before the end of this year.

Watch this space..

Renewable Heat Incentive aimed at businesses, with some appeasement for domestic customers before 2012

The Renewable Heat Incentive (RHI) was launched last month by Energy Secretary Chris Huhne. It is the first of its kind to encourage renewable heat installations and is intended to reduce the UK’s carbon emissions by 44 million tonnes by 2020. Currently around half of the country’s carbon emissions come from the energy used to produce heat – over 95% of heat in the UK is produced by burning fossil fuels, the majority of which is gas. The Government is aiming for 12% of the UK’s heat demand to come from renewable sources by 2020, a major increase from the current level of 1.5%. Of the 12%, it is anticipated that just 1% will come from the domestic sector and so the initial focus of the RHI is on business users.

RHI tariffs are anticipated to be available for the non-domestic sector from July 2011 (Phase 1) and for domestic installations from October 2012 (Phase 2). Non-domestic sector includes industry, business and commercial, charities and not-for-profit organisations, public sector organisations, as well as a renewable heating installation serving multiple residential dwellings, and residential premises that have been converted for non-residential use.

The non-domestic installations cover solid biomass & municipal solid waste, ground source & water source heat pumps, deep geothermal, solar thermal, biomethane injection & biogas combustion (except from landfill gas). Air sourced heat pumps have been excluded at the moment and there is a requirement for the RHI payments to be metered rather than deemed heat output.

The RHI will be funded from a total budget of £860m (rather than a levy on heating bills) over the period 2011-2014. The RHI will last until 2020 with payments guaranteed for 20 years from entry to the scheme. Like the Feed-in Tariffs, tariff rates will be adjusted annually in line with inflation and the Government plans to introduce degression in 2012. Payments will be made quarterly, have to be paid to the owner of the equipment and cannot be assigned to anyone else. Tariff rates for non-domestic installations range from 2.6p per kWh to 8.5p per kWh.

Anyone who has installed renewable heat since 15th July 2009 will qualify for RHI payments, provided they meet the eligibility criteria. In order to appease the domestic sector, from July 2011 to October 2012 a one-off direct payment, the ‘RHI Premium Payment’, will be paid to subsidise the cost of qualifying renewable heat installations for eligible domestic properties only. Likely levels of these Premium Payments are £300 for solar thermal, £950 for biomass boiler and £1250 for ground source heat pump. Domestic RHI payments are likely to coincide with the Green Deal in October 2012 to allow a more ‘whole house’ approach to heat production and energy saving.

We will keep you updated of developments with the RHI. Further details are available from DECC (Department of Energy & Climate Change) at http://www.decc.gov.uk or the Carbon Trust at http://www.carbontrust.co.uk.