Solar panel earnings to be slashed next year

A house with solar panels on the roof

The amount households can earn from solar panels will be slashed next year, the government has announced today – although the move doesn’t affect those who already have panels installed and registered.

Under the Government’s Feed-in Tariff (FIT) scheme, energy suppliers pay households with certain solar panels a set rate for each unit (called kWh) of electricity generated.

Once the solar panels have been installed and your system has been registered, the amount you’re paid is guaranteed for the length of the tariff – which is up to 20 years.

Currently households earn 12.47p/kWh, which falls to 12.03p/kWh from 1 January 2016.

But following a consultation, which received nearly 55,000 responses, the government has today announced that from 8 February, households will earn just 4.39p/kWh – although this is more than the 1.63p/kWh the government had initially proposed.

The government has also revealed it is capping new spending on the scheme to £100 million up until the end of 2018-19. Applications received once the funding runs out, will be placed in a queue until the next tranche of funding opens.

So how much will I earn?

Based on the current FIT rate of 12.47p/kWh, a household in the south of England with an average solar panel installation (which is a 4kWp PV system) would typically earn the following, according to the Energy Saving Trust:

  • Current system: £475/year from the FIT, which equates to £635/year in total once you factor in bill savings and what’s called the export tariff, which is where you sell any electricity you generate, but don't use, back to your supplier.
  • New system: £170/year from the FIT, which equates to £330/year in total.
  • Loss: £305/year.
  • The same household in the north of England would typically earn:
  • Current system: £420/year from the FIT, which equates to £565/year in total.
  • New system: £150/year from the FIT, which equates to £295/year in total.
  • Loss: £270/year.

If I apply to have solar panels installed now, will I get the current rate?

It’s unlikely that if you apply for solar panels now that you’ll get the current higher rates, according to the Energy Saving Trust.

It says this is because the deadline to receive the higher tariff is 15 January, which leaves households with less than a month to get the works planned, carried out and have their FIT applications processed. You also need to consider the impact of Christmas and the likely surge on installers in response to the changes.

However, anyone mid-way through the installation process that registers their panels before 15 January 2016, will get the current rates.

The lower 4.39p/kWh rate kicks in for panels registered from 8 February following a “pause” on new applications from 15 January to 8 February.

Why is the government doing this?

Renewable energy subsidies, such as the FIT scheme, are paid for via everyone’s energy bills, regardless of whether you have solar panels or not. So the government says its plans are aimed at controlling the cost of the scheme to limit the impact on consumer bills.

Amber Rudd, secretary of state for energy and climate change, said: “My priority is to ensure energy bills for hardworking families and businesses are kept as low as possible whilst ensuring there is a sensible level of support for low carbon technologies that represent value for money.”

‘Lack of renewable ambition’

Commenting on today’s announcement, Graham Ayling, head of Energy Saving Trust Foundation, says: “In September we asked for the government to maintain the FIT over the course of this parliament and develop a longer term plan to phase out support gradually.

“Therefore, we welcome this response in that it will provide greater stability to the sector and give investors and manufacturers more time to plan.

“However there is a fundamental lack of ambition reflected in this response. Renewables are the future of energy generation, but there is an air of unreality between what was agreed in Paris last weekend and renewable energy policy today.

“The playing field is not level and these changes are wilfully drawing support away from renewable energy and towards nuclear and fossil fuels.”

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Of course, Mr Osbourn was concerned about reducing the payment of the panel energy borne by other, non-panel electorate, rather than making more money for the treasury!  In the time that government payments have reduced from ca 45p/kWh to the current 12.5p  it has gone unnoticed that the reductions have not worked their way through a reduction in energy bills for those without solar panels. Osbourn is probably the most dishonest  Chancellor in living memory!  Notice  how the commitment to raise the estate-free-duty to the million pounds is in reality divided between 2 (husband and wife) and not per person thereby raising the range by a mere £175k per person.  And it's still waiting to be implemented.