Extension to solar energy FiTs
January 2012
Farmers and landowners should seriously consider the benefits of investing in solar energy following the probable extension of the current subsidy level until early March 2012.
The Government had announced plans to cut subsidy rates from 12 December 2011, 11 days before its consultation about the cuts had ended. Last month the High Court ruled that the Government’s plan to retrospectively cut the so-called feed-in tariff (FiT) had been handled in a ‘legally flawed’ way. The Court of Appeal (CoA) has now upheld the High Court's ruling. Under the feed-in tariffs programme, people in Britain with solar panels are paid for the electricity they generate as a rate of just over 43p per kilowatt peak (kWp).
Last week the Government announced that if its bid to overturn the High Court’s decision was unsuccessful then a new cut off date - the 3 March 2012 – would apply. This means the planned 21p/kWp - which will halve the rate of return for investors – would apply to new installations made on or after 3 March 2012.
Gareth Lay, renewable energy expert highlights the fact that “Farmers and landowners now have a window of opportunity to invest in solar panels and benefit from the 43p per kWp feed-in tariff, which is guaranteed for the life of the technology’s contract and is index-linked to inflation. The return on investment can be considerable depending on the size of installation used, for example, if a business normally pays around 10p/unit to their external power supplier, the effective value of the electricity generated with FiTs could be as high as 51.3p/unit.”
But the Government is considering appealing in the Supreme Court against the latest ruling, potentially allowing them to return to the cut-off date of 12 December. Gareth commented: “If the Government decides to pursue this course – and wins – it would cause considerable outrage in the renewable energy industry and further confusion amongst the general public about the subsidy level. However, it would be prudent for businesses to ensure that even if the rate were dropped to 21p/kWp, their investment would still be viable.”
Gareth added: “Despite its name, the feed-in tariff is not a payment for feeding electricity into the grid, but is paid in full even if you use all the electricity yourself. The tariff for surplus electricity exported to the national grid remains 3.1p per kilowatt-hour paid in addition to the tariff, and is unaffected by the subsidy changes.”
For more information on how you could benefit it from this potential window in solar energy FiTs, contact Gareth Lay on 0845 2000 6489, or email This e-mail address is being protected from spambots. You need JavaScript enabled to view it
