A proposal to slash feed-in tariff rates for companies installing over 25 solar panel systems could mean the end of ‘free solar’ schemes.
The feed-in tariff (FIT) offers cash payments to households who produce their own electricity at home with solar photovoltaic (PV) panels. However, some companies who run rent-a-roof or ‘free solar’ schemes have also benefited.
The companies install and maintain solar panels free of charge on your house but they get the FIT payments.
The government has already announced that companies with over 25 solar panels will only get 80% of the normal feed-in tariff (FIT) rate from 1 April 2012. That’s 16.8p/kWh. However, it has also published a consultation about the future of FIT, proposing further cuts. Companies with ‘multi-installations’ would only be entitled to a much lower tariff, roughly equivalent to 4.5p-6p/kWh.
Free solar schemes
One company offering rent a roof schemes, Engensa, told us it is concerned about the proposal, saying it could end the industry’s ability to offer ‘free solar’.
The advantage of these schemes is that you don’t have to find any cash upfront for the panels and you benefit from the free electricity produced by the system.
However Which? calculated that, at least with the old rate of FIT, you would be financially better off buying the panels upfront yourself, as you can make money in the long-term from FIT. See our guide to ‘free solar’ for more information and to find out what to watch out for with these schemes.
Is ‘free solar’ unfair?
Because FIT is paid for by consumers – though a small levy on electricity bills – rent-a-roof schemes mean that ‘free solar’ companies pocketed a chunk of that cash.
Which? thinks that the profits from rent-a-roof schemes should be shared more fairly between the rent-a-roof company and the householder. We are also concerned that cash intended for householders is going elsewhere.
But if the new proposed FIT rate for ‘free solar’ would make these schemes unviable, rent-a-roof companies might not exist anymore.
Solar subsidies slashed
The announcement from the government also confirmed that householders installing solar panels after 3 March 2012 will get a lower FIT rate of 21p/kWh instead of the old 43.3p/kWh. There is however still uncertainty about whether systems installed between 12 December 2011 and 3 March 2012 would get 43.3p or 21p/kWh. This is because of an ongoing legal challenge with the government. Find out more in our guide to FIT.