The government released a consultation document reviewing the Feed In Tariffs (FIT’s). In it they are suggesting that installations for retro fit properties will be cut from 43.3p per kWh to 21p per kWh. The reason for this is due to the better than expected take up of solar panels which has subsequently reduced cost of the installation. Essentially the scheme has been too successful.
With the cost of the panels and installation dropping so quickly the FIT tariff shone out as a not just a great option to go carbon neutral but also one of the best investment opportunities in the UK.
The tariff was always going to be reduced at regular intervals to keep them in line with the cost of installation, which will continue to decrease. So the fact that they are being cut comes as no surprise and makes perfect sense. In fact the solar industry has been requesting the cuts for some time to ensure sustained growth. The industry will still be subsidised and will still continue to grow. Minister of Energy and Climate Change Greg Barker defended the cuts this morning, saying: ‘Being sensible with tariffs means there will be more money to go round.’
Any installs for retro fit properties registered before the 12th of December will still be eligible to receive the 43.3p per kWh. Following this date homeowners will be subject to the lower tariff of 21p per kWh.
It is estimated that the cost of an average install has dropped by around 50% since 2008, however one of the main reasons for this drop is the subsidised production of the panels in China. Essentially the cost of panels has been artificially lowered by the Chinese government in an attempt to dominate the market.
I remember my business studies class at school teaching me about “dumping” policies and how Honda managed to kill off many British motor cycle manufacturers with a similar pricing policy back in the 70’s.
A cut in line with current installation levels will play directly into the hands of the Chinese manufacturing machine forcing installers to choose Chinese products and hitting local EU producers of solar panels the hardest at a time when we need to be encouraging growth in the west.
One suggestion within the industry is that we should not simply cut the Tariff’s in line with the current cost of installation but we should look at the source of the technology installed, where the installation is commissioned and the subsidy should be tiered to ensure that we continue to reward UK/EU commissioned and produced systems and sustain a home grown industry which has developed and is starting to flourish.
Regardless of the cuts it is clear that the solar industry will continue to growth as the cost of fossil fuels will only continue to increase and the cost of installation will continue to come down. The recent cuts merely rebalance returns for consumers in line with their investment and at the new levels this will still run at around 4.5%. However it is important that our leaders look at the bigger picture at a time when western manufacturing and industry struggles to compete with the east.
If you are looking at electrician training solar PV will still remain a key part of an electrician’s skills set. In fact it has been built in as standard to the new City & Guilds 2357 and EAL electrician courses.
Solar PV courses are also still a great addition to a domestic installer’s skillset and a worthwhile investment of time and money.