The announcement today, October 31 2011, by the Department for Energy and Climate Change sees the launch of Phase 1 of a review of the feed-in tariff scheme. The initial shock announcement will see a proposed cut in the current rate of about half. The changes are likely to take effect from for new installations on or after 12 December 2011 but will not affect the higher rate installations already existing before this date.
Although this is not as yet set in stone it is likely the governments proposal will remain as proposed after the consultation period which is due to conclude 23 December 2011. This announcement will no doubt affect the solar industry and put in jeopardy the availability of free solar panel offers that are currently available to the public. It is likely that many of the rent a roof companies will not continue to be able to trade resulting in many job losses.
If you are thinking of buying your own solar PV system then you are going to have to act now to get your system installed before December 12 to ensure you are guaranteed the existing FIT rate of 43.3p for 25 years. If you are looking for a free system then you should probably apply now as it is uncertain which companies will be offering free solar after this date. So if you act now you can still guarantee your system will be treated under the existing more favourable terms.
The Feed-in tariff scheme does cover other renewable energy technologies such as wind, this is not affected under this review but will be considered under phase 2. Much of the media has been focussing on the tariff rates that will affect homeowners but the tariff for solar across the board are to be cut except for stand alone systems and systems over 250kW.
If you are lucky enough to get a free solar system or manage to invest in solar before the proposed changes take place then you will continue to benefit under the old scheme for a guaranteed 25 years. The proposed rate changes will no doubt prevent a lot of people from investing in solar as the returns may mean a payback period of as much as 20 years rather than the current 7 years. Certainly anyone who is retired or nearing retirement is unlikely to risk an investment of 20 years.
The capacity for firms to be able to offer free solar is going to be greatly decreased as many firms stop offering systems altogether and it becomes much harder to qualify for a free system. The government review also hints at homes having to be energy efficient before they can qualify for the tariff, homes that do not will only get a much lower rate. Unfortunately this will preclude many households, particularly those with older properties.
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