Last day for higher rate solar panel subsidies?Cuts to solar panels subsidies challenged in court

12 December 2011

solar panels on a house

The FIT offers cash payments to those who produce their own electricity at home

Today could be the last day that people can benefit from the higher rate of feed-in tariff (FIT) - which gives you cash payments for having solar panels on your roof.

In October, the government proposed a reduction in FIT payments from 43.3p per kilowatt-hour to 21p, for new installations registered after the 12 December. So although the consultation runs for another two weeks, if the proposals are accepted, the last date to get the higher rate is today. If you're already on the higher rate you'll be unaffected.

This means that Solar PV might not be such a good financial investment anymore. The annual rate of return could be lower than a good cash Isa. Read our guide to solar PV as an investment for full details.

However, the UK's high court has agreed that Friends of the Earth and two solar companies can challenge the government's proposed cuts to solar panel subsidies.

Which? view on solar panel rates

Which? energy expert Sylvia Baron, says: 'Which? thinks the tariff should be reduced  - as it could cost UK households £12 each in 2015 and as much as £26 each in 2020 on their electricity bills. However, we have concerns about the proposed changes. 

'The proposal is unfair to consumers who have recently signed contracts expecting the higher rate. Putting back the date would help these households. It would also mean the date would be after the consultation ends, as it should be.'

There was a rush in applications for the FIT before today's deadline and there have been reports of problems with the Microgeneration Certification Scheme website, as installers try to sign up customers. However, the MCS is today saying that, last week, the database underwent alterations to improve its performance.

Solar panel court case

Friends of the Earth and two solar companies - Solarcentury and HomeSun - are taking the government to court over the proposed cuts. Friends of the Earth claims the government's actions are unlawful because:

•         It will cause consumers to abandon planned solar work that would have been completed between 12 December 2011 and April 2012
•         They believe that the wording used in the government proposals indicate ministers won't keep an open mind about the consultation - something they are legally obliged to do.

Friends of the Earth also claims that the government's planned cut will destroy up to 29,000 jobs and cause the Treasury to lose up to £230 million a year in tax income, based on analysis by energy consultants Element Energy.

Update, 15 December: FoE, Solarcentury and HomeSun have won the right to challenge the government over the proposed cuts to FIT. The High Court will hear judicial review on the FIT cuts on 20th and 21st of December.

Find out full details about the FIT and how the cuts will affect earnings in our Q&A guide to the proposed changes to the feed-in tariff.

More on this…

• Our full guide to FIT reveals full details of the proposed changes
Will the sun stop shining on solar panels? Join in the debate at Which? Conversation
• The Which? Affordable Energy Campaign - find out how you can get involved