Today, anyone not involved in the renewables sector is either breathing a sigh of relief or wondering what on earth the feed in tariff actually is and why it is causing such a big stir in the renewables sector.
So for the benefit of those who do not know what the feed in tariff is.....The feed in tariff was first announced in the UK back in October 2008 as an attractive proposition to home-owners who could, in return for an investment in renewable energy (most likely solar panels) could save money on their electricity bills.
Homeowners would receive a percentage of the energy generated back in cash, therefore receiving a decent return on their investment (higher than the money sitting in a bank account!)
The idea behind all this was that the more energy produced by the solar panels and sent back to the grid would mean the cost of the electricity for everyone would be kept to a lower level as the grid would not need to produce such huge quantities of its own energy by burning more precious fossil fuels.
The scheme was officially launched in April 2010 with home-owners with a renewable energy installation receiving a rate of 43.3p per kWh in cash back from the government..
So everyone was in a win-win situation right? Cheaper electricity for everyone, and a good return on investment for those sending clean energy back to the grid.
It seems that not everyone has been singing from the same song sheet however....businesses up and down the UK, many of whom have invested heavily in renewable energies or are completely reliant on the renewables sector, waited anxiously yesterday, 31st October to find out the latest government proposals in regard to the reduced tariff rates – everyone knew the government would be reducing the tariffs, but no one knew by how much.
And so it turns out that the government is now proposing a reduced tariff of 21p per kWh Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure those schemes receive a consistent rate of return. Additionally, there are new energy efficiency requirements relating to the building on which the installation is attached or wired to be met. The government have cited the main reason for bringing in reduced rates was the longevity of the renewable energies sector – there was fear that the sector could become a victim of its own success burning out as fast as it had entered the market. This is because the cost of a domestic PV installation has fallen by around 30% since the start of the scheme in April 2010. The has led to a surge of home-owners installing a PV installation which threatened to break the governments Feed In Tariff (FITS) budget meaning that the payout back to home-owners would exceed the allocated available budget.
This news understandably has not been received well amongst the renewable energies sector with many fearing that home-owners will not bother in investing in renewable energy accompanied by headlines such as 'Feed-in Tariffs cuts will kill solar industry stone dead.'
Upon digesting the information, it seems that there is still time to benefit from the higher feed in tariff rate and those with current PV installations will not be affected by the cuts. Home-owners who fully complete a solar PV installation before midnight on 11th December 2011 will still be eligible to receive the 43.3p per kWh for the next 25 years.
If this deadline is not met, home-owners will still be able to benefit from the date the application is received by the FIT licensee until 31st March 2012. During this time, the home-owner will receive 43.3p per kWh. However from the 1st April 2012, the rate will then be reduced to the governments proposed rate of 21p per kWh.
After 1st April 2012 home-owners will then receive 21p per kWh providing they can prove that the building that the installation is attached or wired to meet the new energy efficiency requirements. If the requirements are not met from the time of the installation and for 12 months following the installation then the home-owner receives 9p per kWh.
So back to the title of our article – is it all bad news?
Is the market about to become saturated with solar PV installers with no work?
Do you think there will a huge surge in demand for solar PV installation between now and December 11th?
Do you think the solar industry is dead?
or maybe the home-owners will see the other benefits of solar PV installation and not worry too much about the cuts – all being well this should still yield a better return than a bank account!
Electricity bills will still be cheaper!
Still Making a difference to the environment!
Is all this enough or are we all only interested in the money received back from the government?
Personally we think you should 'watch this space' We would love to hear your comments!