Changes to the Feed-in Tariffs*

Following the consultation on changes to the feed-in tariff (FIT) that was formally announced on Monday (31/10/2011), here is a little more information about the proposals and how they will affect solar PV projects.
 

a)      Proposed tariff changes
 
The feed-in tariff degression is the same as was accidentally announced on Friday in an Energy Saving Trust document, with the only main change being the date from when new installations will face a different tariff. The proposed lower tariff rates are due to come in from April 1st 2012. However, if your installation becomes eligible for FIT payments between the 12th of December and the 31st of March then you will receive the higher FIT rate until the 1st April 2012 when you will be transferred to the lower tariff for the remainder of the 25 years of your FIT contract.
 
Please see below for the proposed new tariff levels across all size of installation for solar PV. Note that this affects both domestic and non-domestic (including community) installations.
 

Band (kW)                   Current generation tariff (p/kWh)            Proposed generation tariff (p/kWh)

≤4kW (new build)                           37.8                                                         21.0
≤4kW (retrofit)                                43.3                                                         21.0
>4-10kW                                        37.8                                                         16.8
>10-50kW                                      32.9                                                         15.2
>50-100kW                                    19                                                            12.9
>100-150kW                                  19                                                            12.9
>150-250kW                                  15                                                            12.9
>250kW-5MW                                 8.5                                                            8.5
stand alone                                     8.5                                                            8.5

 
b)      Impact on payback periods
 
This will obviously have an impact on the projected income for your solar project as it will significantly increase payback times, which in turn could alter financial modelling. Below is an example using a real quote from an installer for a 49.5 kWp system (costing £116,984.35) and how this changes the payback time and estimated return. Please bear in mind that price and savings can vary from installer to installer and that this is purely an example.
 
FIT Rates                     Total annual earnings and                     Simple payback (years)           Estimated income                    –                                    savings with a 49.5kW system                                                              (minus cost) over 25 years

Current 32.9p/kWh                          £ 16,430                                             7.1                                      £ 284,623
Proposed 15.2p/kWh                         £ 9,231                                           12.6                                      £ 113,793
 
 
 
c)       FIT registration
 
Under the existing conditions, to be FIT eligible your panels need to be fully installed and your chosen FIT licensee must have registered your installation. For this, an application needs to be made which may take a week or more to turn around. So if you have an installation in progress, contact your FIT licensee as soon as possible to (1) check the time frames and (2) find out exactly what information will be required for the application to register for the FIT. We would also recommend sending any application in by special delivery so that you know it’s been received.
 
d)      Consultation documents
 
There is still time to respond to the consultation which closes on Friday 23rd of December. You can respond either online, by email (fits@decc.gsi.gov.uk) or by post to this address: Feed-in Tariffs team, Department of Energy and Climate Change, 3 Whitehall Place, London, SW1A2AW.
 
The Low Carbon Communities Network is supporting several campaigns challenging the proposals. There is more information on their website.
 
e)      More information
 
If you require any further advice on these proposals please get in touch with The CSE Communities Team (communities@cse.org.uk), and if you want to know more about how this affects domestic installations please contact the Energy Saving Trust on 0800 512 012.
 
 

*This news articles has been unashamedly pulled from a CSE email. They just manage to say it so well- So thanks CSE.