Solar panels look set to be a far less lucrative investment for many householders, as a result of new Government proposals unveiled this week.
These proposals could mean far fewer firms will offer "free installation" deals. This could mean the scheme becomes the preserve of the middle classes with only those who can afford the £10,000 plus installation look set to be able to use solar panels to cut their own domestic fuel bills.
Q: What subsidy is being cut?
A: At present the Government pays a "feed-in tariff" to all households who install their own solar panels. At present this is 43.3p for each kilowatt hour (kWh) generated, plus a further 3.1p for each kWh that is exported back to the National Grid. But solar panels installed after December 12 will only earn a tariff of 21p for each kWh generated. As is the case now though, home owners will still be paid for electricity, even if they use it themselves.
Q: I've already got solar panels installed, will I be affected?
A: No. When this scheme launched, back in April 2010, the Government pledged to increase the feed-in tariff in line with inflation for the next 25 years. Those who already have solar panels will remain locked in to these original terms.
Q: I've just signed with a company to install these panels. Will I get the current rate?
A: This depends how quickly the firm can install your panels and sort out all the relevant paperwork. Customers do require a proper certificated to get this feed-in tariff. According to Consumer Focus, it takes an average of four weeks to complete this process, but it can be significantly longer. There is also likely now to be a huge rush of people keen to beat this deadline. This could slow down systems considerably. A spokeswoman for Consumer Focus said: "Anyone signing up now should assume they'll get the lower rate, and work out savings based on these figures."
Q: Is there any chance this date will be pushed back?
A: It's a slim chance, but this is as yet only a consultation document. Consumer Focus and other groups are lobbying for a delay, to ensure that those who have already signed up, but haven't got the system fully installed aren't disadvantaged by this change.
Q: Why is the Government cutting this tariff? I thought they wanted to encourage sustainable energy initiatives.
A: This scheme has been a victim of its own success with far more people signing up for than anticipated. This feed-in tariff is subsidised by other consumers, with a green levy being added to energy bills. The Government has pledged that this will not be more than £23 a year by 2020, so has to reduce the tariff rate to meet this cap. The Government has also argued that the cost of installing these panels has also reduced, meaning home owners need less of subsidy to make money on the scheme.
Q: So is it worth considering solar panels now?
A: Home owners can still make money from this scheme, but with the feed in tariff being halved it will take longer to recoup outlay costs, even with the price of panels falling. Previously, home owners could have expected to generate an average income of £1,190 a year from this scheme; now it is expected to fall to just £640 a year. This means it will now take up to 18 years to recoup upfront costs, rather than 10. Those who are likely to move house within this period may be reluctant to make this initial investment.
Q: Many firms now offer "free" installation, will these deals still be available?
A: Most of these firms pay to install the panels on your roof (or do so at a hugely reduced cost) and in exchange will take the feed-in tariff. Effectively you are renting out your roof, but get to use the electricity generated to reduce your own bills.
According to the Energy Savings Trust these savings are estimated to be about £90 a year – less than many companies claim – although much will depend on current energy use and size and location of the panels.
In theory the cut in feed-in tariffs won't affect home owners, who can still reduce energy bills at the same rate. In practice this will affect profit streams at these installation companies, who are likely to charge more for installation or pull out of this market completely. Again, those who already have rented panels on their roof won't be affected.
A: No. When this scheme launched, back in April 2010, the Government pledged to increase the feed-in tariff in line with inflation for the next 25 years. Those who already have solar panels will remain locked in to these original terms.
Q: I've just signed with a company to install these panels. Will I get the current rate?
A: This depends how quickly the firm can install your panels and sort out all the relevant paperwork. Customers do require a proper certificated to get this feed-in tariff. According to Consumer Focus, it takes an average of four weeks to complete this process, but it can be significantly longer. There is also likely now to be a huge rush of people keen to beat this deadline. This could slow down systems considerably. A spokeswoman for Consumer Focus said: "Anyone signing up now should assume they'll get the lower rate, and work out savings based on these figures."
Q: Is there any chance this date will be pushed back?
A: It's a slim chance, but this is as yet only a consultation document. Consumer Focus and other groups are lobbying for a delay, to ensure that those who have already signed up, but haven't got the system fully installed aren't disadvantaged by this change.
Q: Why is the Government cutting this tariff? I thought they wanted to encourage sustainable energy initiatives.
A: This scheme has been a victim of its own success with far more people signing up for than anticipated. This feed-in tariff is subsidised by other consumers, with a green levy being added to energy bills. The Government has pledged that this will not be more than £23 a year by 2020, so has to reduce the tariff rate to meet this cap. The Government has also argued that the cost of installing these panels has also reduced, meaning home owners need less of subsidy to make money on the scheme.
Q: So is it worth considering solar panels now?
A: Home owners can still make money from this scheme, but with the feed in tariff being halved it will take longer to recoup outlay costs, even with the price of panels falling. Previously, home owners could have expected to generate an average income of £1,190 a year from this scheme; now it is expected to fall to just £640 a year. This means it will now take up to 18 years to recoup upfront costs, rather than 10. Those who are likely to move house within this period may be reluctant to make this initial investment.
Q: Many firms now offer "free" installation, will these deals still be available?
A: Most of these firms pay to install the panels on your roof (or do so at a hugely reduced cost) and in exchange will take the feed-in tariff. Effectively you are renting out your roof, but get to use the electricity generated to reduce your own bills.
According to the Energy Savings Trust these savings are estimated to be about £90 a year – less than many companies claim – although much will depend on current energy use and size and location of the panels.
In theory the cut in feed-in tariffs won't affect home owners, who can still reduce energy bills at the same rate. In practice this will affect profit streams at these installation companies, who are likely to charge more for installation or pull out of this market completely. Again, those who already have rented panels on their roof won't be affected.
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