The UK government has announced that it plans to make drastic changes to the renewable energy subsidy scheme for solar panel owners
In August 2015, the government announced plans to reduce the Feed-in Tariff (FIT) by close to 90%. The FIT is a subsidy that pays homeowners and businesses for each unit of renewable energy which they generate. Currently the FIT means that the average solar panel system pays out £495 a year. When the cut is enacted in January 2016, all new homeowners who install solar panels will receive less – just £64 a year according to the Energy Saving Trust.
Why has the government made these changes?
The government’s official argument is that these cuts will lead to savings of £6 on the average homeowner’s energy bill. Amber Rudd, energy secretary, has said that the “overall cost of the scheme to the wider public has exceeded expectations, while the price of solar installations has fallen spectacularly.”
The Huffington Post agrees on that last point, telling readers that “since 2008, the global cost of installing solar panels has actually fallen by as much as 80 per cent, and contractors have made big strides in operating more cheaply and efficiently.”
The changes have been criticised by environmental groups and big businesses alike. Friends of the Earth say that the changes to the subsidy will cost the UK 20,000 jobs, and Panasonic, a normally quiet company, has urged the government to “ help (the solar industry) further develop to become fully independent from state support, with energy storage and a closer involvement of utilities. But let’s not push the bird out of the nest before it can properly fly.”
What does this mean for those who already have solar panels installed?
Those that already have solar panels installed will continue to receive payments at the original rate. The contract that a homeowner makes with the government when installing solar panels is binding, and cannot be affected by later changes to the FIT rate. This means that lucky individuals who already have solar panels installed will continue to benefit for years to come.
What does this mean for those thinking about getting solar panels?
It’s not too late to benefit from the current FIT levels. If you get solar panels installed before January 2016, then you’ll qualify for the current rate of payment for the next 20 – 25 years, which adds up to £8,750 in FIT payments alone. That’s not to mention the substantial savings you’ll make on your energy bill too.
We shouldn’t forget either the reason for solar panels in the first place. The government website states that: “Innovation in energy technologies is essential if the UK is to meet our challenging future climate change goal of an 80% reduction in greenhouse gas emissions by 2050.”
Other renewable energy subsidy schemes have not been targeted by the government. Ground source heat pumps, air source heat pumps and solar water heating systems are covered by a different subsidy, the Renewable Heat Incentive, which still guarantees generous payments of 19.2p per kWh over the next seven years.