8 weeks left to receive the 21p Feed-in Tariff

by Sara Pernas

Less than 8 weeks is the time homeowners have to install solar panels under the 21p Feed-in Tariff scheme. After that, from 1st August 2012, the new 16p Feed-in Tariff announced by the Government will start, and solar PV installations returns will change.

In April 2012, the UK Government introduced the 21p FIT. This new scheme kept everything as it was, with the exception of the Feed-in Tariff, which dropped from 43.3p to 21p per kWh. To receive these FITs now, you are required to have an Energy Performance Certificate (EPC) showing that your property has an EPC band D (for a system under 4kWp). In case your house doesn’t reach EPC band D, you will receive a lower tariff of 9p/kWh.

From August 2012

From August 2012, FITs will drop from 21p to 16p per kWh, and new solar panels owners will be paid during 20 years instead of the 25 years they used to. On the flip side, Export Tariff – the money you receive for each kWh you sell to the National Grid – will be increased, from 3.2p to 4.4p per kWh.

But… do we really have to worry about this news?

In the current days, 21p FITs are giving around a 11.5% of return on investment on the 1st Year, which, in case solar panel installations prices will stay as they are now, will be just between 1 and 2% lower than now when the August Feed-in Tariffs start, becoming around a 9.9%.

A 16 panels installation (4kWp system) would cost around £7,500 now. As an example, if we take Year 1 data from a 4kWp installation (16 solar panels) with the current Feed-in Tariff, and we compare it with what would be the result of the new FITs starting on August 2012 during the first years, the results are surprisingly quite similar:

Return on Investment of Solar Panels during Year 1
Comparison between 21p and 16p FIT
Chart comparing Feed-in Tariffs returns of Year 1 in April 2012 and August 2012

Chart comparing Feed-in Tariffs returns of Year 1 in April 2012 and August 2012

These results reinforce and demonstrate, once more, that solar energy is one of the best investments possible in the current days. So why is solar demand so low? Well, the truth is solar technology is still quite a new resource for British people, and it seems it’s not easy being well informed, above all since lots of negative news about changes the Government has done have been published in the papers every day. In addition, although prices are dropping, this energy efficiency alternative requires a “big” investment in the beginning, and also a little bit of time to receive it back and start making profit.

Although there is not too much to do with homeowners decision to take a step forward and start to save energy and money, if the UK Government maintain the FITs scheme and solar energy hubs keep on giving information about the sector, solar PV will become a very important renewable energy source for the entire country, as well as the best investment possible.


Related Links

New 16p Feed-in Tariffs deadline extended until August 2012

New feed-in-tariffs regulations from 1st April 2012

Four trade associations united to defend UK Solar

Feed In Tariff Requires Energy Performance Certificate @ Level D or Above

How the UK Feed In Tariffs Work – Video

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