Feed-in tariffs explained Feed-in tariff cuts
The feed-in tariff (FIT) has been providing payments to owners of electricity-generating renewable energy technologies since 2010.
The generous initial rates of FIT meant the uptake of solar panels was faster than expected. The government has since decided that the rates for solar PV have to be cut to control cost.
Read on to find out more about the feed-in tariff cuts - from how it will affect you if you already have solar panels, to whether solar panels are still worth investing in.
Has the feed-in tariff been cut?
Yes, it has been cut for new installations from 1 January 2016 to 4.39p per kWh. Systems installed before this date are not affected.
Find out more about the recent changes to FIT in our guide to feed-in tariff earnings and savings.
Are solar panels still a worthwhile investment?
The lower FIT will mean a longer payback time for the solar panels. If your home is particularly energy inefficient, you also have to consider how much it will cost to bring its Energy Performance Certificate level to D or above. This is the minimum level required in order to qualify for the higher rate of feed-in tariff. About half of all properties are already eligible for a D rating.
This makes solar PV a long-term investment, as you'll only make a profit once the system has paid for itself. The feed-in tariff is paid for 20 years (it used to be 25 years).
However, if installation costs continue to fall and you pay less for your system, and/or if electricity prices continue to rise, the payback period will shorten.
Putting the £6,000 to £9,000 typical solar panel cost into an ISA for the same amount of time might lead to a higher annual rate of return. Find out more in our guide to solar PV as an investment.
I already have solar panels. Does this affect me?
No. Solar PV systems already registered for the old feed-in tariff rates are not affected. Any change to the feed-in tariff rates, including the latest cut in January 2016, only affects new installations.
What if I wait – is the tariff fixed?
No, the government reviews the FIT rates on a regular basis, as well as applying a 'degression mechanism' which will reduce the tariff on a regular basis if costs continue to fall.
What about other technologies such as wind turbines and solar thermal panels?
Wind turbines, hydroelectric and micro-combined heat and power systems are all eligible for the feed-in tariff and have also been cut - but to a lesser extent. Our table of feed-in tariff rates shows the latest rates for all eligible technologies.
Solar thermal panels - which produce hot water rather than electricity - are eligible for the Renewable Heat Incentive (RHI); a separate government scheme designed to reward homes generating their own heat.
Where can I find out more?
If you are unsure about your options or have any further questions, please contact the Energy Saving Trust Advice line on 0300 123 1234.