Sunset over solar panels in wild land.

The Sun is Setting on Solar Payments

Nov 29, 2018 - 3min read



The Feed-in Tariff (FiT) is a popular government scheme that encourages the uptake of renewable energy by paying small-scale generators (like a home with solar panels on the roof) for the energy they produce - and it will be closing to new registrations on 31st March 2019 without replacement. We explore the impact the Feed-in Tariff has had on the industry and ask whether it’s still worth installing solar.

The Feed-in Tariff Scheme

Established in 2010, the government introduced the Feed-In Tariff to improve the financial case for installing small-scale renewable generation - solar, hydro, or wind to name a few. A tariff was launched that rewarded individuals and businesses for the energy they generated by providing 20* years of tax-free payments. This scheme was aimed at kick-starting the take-up of renewable technologies, and it has proved incredibly popular over the years; there are now over 900,0001 separate installations registered on the scheme.

Graph showing number of FIT registered solar installations from 2010 to 2018.

                                                                                                                                                    Figure 12

As well as helping make the decision to go solar easier for homes and business, longer-term economics of the scheme were considered too - the more solar panels that get installed today, the quicker the industry would be able to realise economies of scale. As panel prices have fallen, the government has reduced the Feed-in Tariff rates - once dramatically in 2012 and incrementally since then. The scheme will finally reach its conclusion in April 2019 when new registrations for the Feed-in Tariff will be brought to an end.

Graph showing decline of feed in tariff rates.

                                                                                                                                                    Figure 23

It’s tricky to determine exactly how the ending of the Feed-in Tariff will impact the solar industry. Solar panel prices have come a long way since the FIT scheme started, but when the rate dropped in 2012 so did the short-term demand for solar.  Equally, falling panel prices and the green credentials of generating you own energy are being better understood by curious homes and business alike. However, recent announcements suggest that this might not be the last we see of the Feed-in Tariff. Claire Perry, the minister of state at the Department for Business, Energy and Industrial Strategy (BEIS), recently stated that BEIS will be announcing some new next steps for small-scale generators soon (as reported in our blog, homeowners should make money from their solar) - so there may be some welcome surprises for new purchasers to look forward to.

So where does this leave you if you’re considering solar?

When it comes to buying solar, our message remains simple - we think it makes both environmental and economic sense to go solar, and it will do even after the Feed-in Tariff ends**. Solar systems last for a long time and, installed to a high quality by companies such as The Phoenix Works, they pay for themselves through bill savings alone. What’s more, reducing your dependency on the grid means that homes with solar are less exposed to the ever-changing prices of wholesale grid electricity which have risen over 30%4 since the beginning of the year - we’re seeing more homes invest in solar for peace of mind. Speaking of resting easy, the environmental benefits are more profound today than they’ve ever been before - both air quality and climate change aren’t just interest pieces in science journals, but rather they’re headline news and the impacts apply to all of us.  We’re firm believers of when you’re facing a problem that often taking matters into your own hands is the best way forward - and installing your own solar panels is a great example of this.

All that said, the Feed-in Tariff is around until April 2019. If you’re considering a solar installation, but just not sure when - now might be a great time to take the leap and lock in 20 years of FIT payments. Completing your installation and registering your panels before the scheme closes, means you stand to save an extra 33% above and beyond savings on your electricity bill alone. To get a more personalised view of how you could benefit from solar, you can use our online calculator.

Pie Chart shooing benefits of solar.

                                                                                                                                           Figure 3***

 

* Installs prior to the August ’12 may be eligible for 25 years of Feed-In Tariff payments

** Returns for each installation are different due to variability in installs and home electricity usage. However, this statement is true given standard installs on UK south-facing roofs.

*** Assumptions: Assuming electricity price 15p/kWp, rising by 5% year and FIT rate as of September 2018References

https://www.gov.uk/government/statistics/solar-pv-cost-data

2 https://www.gov.uk/government/statistics/monthly-small-scale-renewable-deployment

3 https://www.ofgem.gov.uk/environmental-programmes/fit/fit-tariff-rates

4 ICE (Intercontinental exchange), as of 31st October 2018.

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