Changes in the Feed in Tariff and How it Affects Solar PV Users

The Feed in Tariff (FiT) is one of the main incentives behind the adoption of Solar PV systems for homeowners in the UK. The tariff, which allows for the owner to benefit from the extra energy generated by their solar system by selling it back to energy companies, has been one of the big selling points for the technology and has seen installations skyrocket over the last few years.

feedintariffThe concern that many people have is that, due to solar panel manufacture and installation falling in price, the tariff will lower as well. This is a well-founded concern and is something that has already been seen in the UK as recently as August 1st, when the tariff was once again dropped from an already reduced level from earlier in the year. To make matters worse, the amount of time that the FiT applies for the system has also been reduced to 20 years, whereas previously the system would generate money for 25 years.

This all means that, after the August 1st eligibility date, homes having a 4kW system will see the amount of money they are paid per kWh reduced to 16.0 pence. The previous figure was 21.0 pence, with the drop being part of an agenda to reduce the amount paid for the energy generated to bring it more in line with the cost of the installations.

Luckily, people who had their systems installed before the August 1st cut-off don’t need to worry. Whichever FiT scheme that they have signed up to will remain in place for the entire duration that it was meant to. So, if you are currently receiving 21.0p for the energy being generated by your system, you will continue to do so for the full 25 years that you signed up for. No later changes in the FiT will be applied to your contract!

People who are looking to get a solar PV system installed now aren’t quite so lucky. With such a dramatic fall in the FiT demand is bound to be reduced but, for those who are determined to plough ahead anyway, in addition to the decrease in the amount of money you will gain, the following should be considered before you sign up;

  • Your tariff will only last for twenty years, rather than the previous twenty-five that had been offered.
  • The tariff will likely be revised again in about three months or so and, while this is likely to result in further reductions, the changes in FiT are intended to match the costs associated with the manufacture and installation of the system itself so if these increase then so will the amount of money you receive from your energy.
  • The export tariff rate, which is the amount of energy generated that goes back to the energy grid rather than to the supplier, has actually increased!

Solar PV systems are still an attractive prospect for most buyers. The systems themselves will help to raise the grade on the Energy Performance Certificate of a home and money can still be generated by the system itself. However, with the constant changes now being made to the FiT, it is very important to consider things extremely carefully before having a system installed.

This post has been provided courtesy of Domestic & General Insulation Ltd (http://www.dgi.org.uk)

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