On Thursday 24 May, the Department of Energy and Climate Change (DECC) unveiled its plans forthe future of the solar Feed-in Tariff (FiT), where it was confirmed that the tariff for<4kW domestic solar installations would change from 21p per kWh to 16p per kWh from 1 August 2012.
After mounting speculation in recent weeks regarding the depth and date of the cuts, the industry and consumers were finally given certainty about the changes to the FiT scheme.
However, whilst the changes to the scheme will see the tariff reduce, the returns that solar can provide will in fact be hardly effected due to the falling costs of a solar PV system.
Tony O’Connor, managing directorof BritishEco, says: “What many people don’t realise is that, in line with the tariff reductions and scheme changes, the costs of solar are reducing dramatically. Coupled with rising energy prices, this means that the return on investment actually only marginally affected by the tariff changes.”
O’connor says the government has received strong criticism from the renewable energy industry over previous actions, with claims that changes to the scheme had damaged consumer confidence and slowed installation rates down significantly. Stating that re-educating consumers will be vital to reviving the industry, he explains: “Even with the new tariff reduction we expect to be able to offer domestic consumers up to 11 per cent return on investment. This is much higher than the return on most other investments, with the added bonus that solar is predictable and safe – once you’ve worked out your return; it is only likely to increase each year with higher energy prices.”
Whilst many will be rushing to have solar installed before 1 August to avoid missing out on the higher tariff rate, in light of the generous returns that will still be available, it is likely that solar will continue to be the most popular way of supplying renewable electricity to a household in the coming years.