The government has slashed the Feed-in Tariff (FIT) for solar. This means that customers will get less income from the electricity they generate and pay-back times for solar panels will increase.
The solar FIT is a renewable subsidy that rewards households for generating renewable electricity. Households receive money for electricity they export to the grid and energy they use themselves. The change to the Feed-in Tariff applies to the money you make from generating solar energy, while the amount you make for exporting energy will stay the same. You can read our guide to understand the difference between the Generation Tariff and the Export Tariff.
If you are thinking of installing solar take a look at the Which? guide to buying solar panels.
Solar panels will earn you less money
The government has announced that from 01 January, 2016, the FIT for solar will drop from the current 12.47p per kWh to 4.39p per kWh. Households installing new solar panels after January will earn less for the energy they make.
The new FIT is slightly more than the Government’s earlier proposed changes of 1.63p per kWh. After a consultation process with industry and the public, it was increased to the announced 4.39p per kWh .
The new domestic solar FIT applies to all systems under 10kW capacity, however, it doesn’t apply to existing customers, who will remain on the current tariff.
What next for small-scale renewable energy?
If you are thinking of installing solar, make sure your house is as energy efficient as possible, as new installations still need an Energy Performance Certificate. The government also plans to pause new applications to the FIT scheme from 15 January to 8 February, to allow time for the implementation of cost control measures.
If you are thinking of installing small-scale wind or hydro, these will also earn you a lower FIT as of January. Small wind and hydro power systems under 50kW will receive a FIT of 8.54p per kWh, instead of the old tariff of 14.45p per kWh.
Under the new FITs, the Government is aiming for a 4.8% rate of return for solar, 5.9% for wind, and 9.2% for hydro.