Latest government announcement on Feed in Tariffs

On Thursday 9 February 2012 the Government announced further changes to the Feed in Tariffs (FITs) for electricity generated by renewable sources.

New tariff

Below are the rates for the Generation Tariff, paid on each kWh generated irrespective of how it is used:

Band (kWp)	Current generation tariff (p/kWh)	New generation tariff from 1 April (p/kWh)
≤4 kWp (new build)	37.8	21.0
≤ 4kW (retrofit)	43.3	21.0
>4 - 10 kWp	37.8	16.8
>10-50 kWp	32.9	15.2
>50-150 kWp	19	12.9

Installations commissioned before 12 December 2011 will receive the “current” rates, which will be increased in line with inflation on 1 April.

The tariff for installations commissioned between 12 December 2011 and 3 March 2012 is disputed; see below.

Installations from 3 March will receive the “current” tariff till 1 April then be reduced to the “new” tariff thereafter. The new tariff will receive its first inflationary adjustment on 1 April 2013.

The export tariff remains unchanged at 3.1 p/kWh. On domestic installations, this is normally based on an estimate that 50% of the energy generated is exported.

New requirement on energy efficiency

To receive the new tariff, installations commissioned after 1 April must also show an Energy Performance Certificate (EPC) at Grade D or above. This links PV installations to energy efficiency measures, such as loft insulation, cavity wall insulation, double glazing, etc.

The government’s earlier proposal had been that either a Grade C certificate would be needed or that a set of energy efficiency measures funded under the Green Deal was underway. Since the Green Deal does not start till the autumn, this clearly cannot be implemented now, so we have this less stringent requirement on the energy efficiency of the property. Apparently, about half of all homes in the UK are at Grade D or above already.

There are few if any exceptions to this requirement. It applies to industrial and community buildings as well as domestic properties. However if the solar panels are installed on a barn, for example, and are powering the electric supply of the neighbouring farmhouse, it is the Energy Performance of the farmhouse, not the barn, that is considered.

If Grade D cannot be reached, a much lower Generation Tariff of 9p will be paid.

Installations from 12 December to 3 March

There is no further news on the rates for installations switched on between 12 December and 3 March. If the Government loses its appeal (and it has already lost in the High Court and the Appeal Court), then the earlier rates (left hand column) will apply; if it wins in the Supreme Court and overturns the earlier judgements, then the new rates will apply form energy generated after 1 April.

Further changes from 1 July

The Government is also planning further changes from July 2012 but is consulting on these and no decisions have yet been made. On past experience, however, responses have little impact so it is likely that most if not all of these changes will be implemented on new installations from July. These proposals are:

• A further reduction to the generation tariff. Three options are proposed, the choice depending on how much solar PV is installed nationwide in March and April 2012. For sub-4 kW installations, the proposed rates vary from 13.6 to 16.5p.

• A decline in rates for new entrants, with a proposal for a 5% reduction in October and then a 10% cut every six months, the exact drop being determined by the uptake in the previous period.

• The tariffs to be paid for 20 years, reduced from 25 years, in line with other renewable technologies;

• An increase in the export tariff, but coupled to a further decrease in the generation tariff;

• An end to indexation of tariffs to the Retail Price Index.

It is important to remember that all these actual and proposed changes are for new entrants to the scheme and do not affect existing installations.

For more information, see the documents on the DECC website. These also give the government’s reasoning for these changes.

How will they affect you?

First, if you have an old house that is unlikely to score well on an Energy Performance Certificate or to be expensive to improve, then it is vital to install your PV system before 1 April.

We will shortly be in a position to issue Energy Performance Certificates, so please ask if you would like your house assessed. The Certificate also shows what energy efficiency measures are recommended and how far they would raise the rating, eg from E to D.

Second, we believe the proposed cuts from 1 July are too steep and that most of the reductions in the cost of PV installation have been realized. Costs will continue to drop, but at a much slower rate than in the last year, and so we suspect overall returns on installations after 1 July will be less if the latest proposals are implemented.

Thus, if you can accept the 21 p rate (or lower for larger installations), then we suggest an installation before 1 July.

Soltrac Ltd
10 February 2012