UK Government Fails in Appeal to Reduce Subsidy for Solar Panels
On January 25, the UK government failed its appeal to cut the payments made to households that install solar panels by half in early March. The decision made by the Court of Appeal means that anyone who had solar panels installed before 12 December are assured of receiving subsidies for electricity generated by their solar PV systems at the current rate of 43p per kWh.
Those who install solar panels before 3 March may receive the 43p rate under the current ruling, though the Department of Energy and Climate Change says that it will seek leave to take the case to the UK Supreme Court. The rate was scheduled to go up for solar PV systems installed after 1 April, but in November the government announced that it was reducing the tariff payments early – as of 12 December instead of the scheduled March date. Groups in the solar industry went to court over the decision, and the court decided that the government’s decision to reduce the payments ahead of schedule was legally flawed and delayed implementation of the change. The latest decision by the Court of Appeal upholds the earlier decision.
As a contingency, the government announced that the rate would decrease for solar PV systems installed after 3 March. If the government fails its appeal to the Supreme Court, those who install solar panels between 12 December and 3 March will still qualify for the 43p rate. If the government succeeds, the rate for those who install solar panels during that time period will qualify for the lower 21p rate.
Energy and Climate Change secretary Chris Huhne explained that the surge of solar PV installations exceeded expectations, and the current budget will not be enough to meet all the expected payments at the current rate. The department would rather use the available money to maximize the number of installations possible rather than pay the higher tariff rate to a fewer number of people.
According to the BBC, the government’s intention to launch a second appeal will lead to uncertainty for consumers and installers, who may be hesitant to invest in solar without knowing what the tariff will be going forward. It means that consumers won’t know what subsidy they’re receive for solar panels installed since 12 December and before 3 March.
Breaking Down the Solar Panels Subsidy
As things stand now, any household that installed panels before 12 December and qualified for the Feed-in Tariff scheme will receive a fee of 43p per kilowatt hour of electricity generated by their solar PV systems. Those who install panels between 12 December and 3 March may be eligible to receive the 43p rate for their solar power generation, or they may qualify for the lower rate of 21p per kilowatt hour. Consumers who install solar panels after 3 March and qualify for the FiTs will receive the lower rate. In any case, the tariff is guaranteed for 25 years at the effective rate in force at the time the solar panels were registered with the FiTs.
In addition to the base tariff rate, households will also qualify for a 3.1p per kilowatt hour exported to the national grid. That rate is not affected by the decision at all.
The Department of Energy and Climate Change is also concerned that a rush of installations may use up the available budget and put the entire program in jeopardy. In response to that, the Renewable Energy Association is calling for an increase to the overall budget to ensure that the subsidies remain available to households that install solar panels.
What It Means for Households Considering Solar Panels
If you are among those households who are sitting on the fence about whether to install solar panels, the court’s decision offers the chance that any solar PV systems installed between now and 3 March will still qualify for the 43p rate. At that rate, energy experts project that your solar PV system will pay itself off in 6 to 8 years, and the solar FiTs subsidy will provide pure income for as many as 19 years. If you wait until the rate goes down after 3 March, your solar panels can qualify for the 21p rate. At that rate, it may take 12 to 15 years for your solar PV system to pay for itself, reducing the number of years of income to as little as 10 years.
The Bottom Line
Whatever the decision Court makes on the government appeal, the FiTs will provide a subsidy to those who install solar panels this year. It’s just a matter of how much profit your investment in a solar PV system will generate. For more information on other ways that solar panels can benefit you, contact a solar PV installer in your area.
Chris Robertson is an author of Majon International, one of the world’s MOST popular internet marketing companies on the web.
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