Solar Panel Sharks in Feed-in Frenzy

Is the roof-top solar panel industry nice, green and eco-cuddly – or no better than a bunch of double-glazing sales sharks? This week a colleague received a call from a solar panel company promising that after the industry's court victory against the government, she could now pick up the juicy 43.3p per kWh feed-in tariff for generating electricity. She was told it made installing a system on her south-facing roof a no-brainer, it was money for old rope.

New adverts all over Google say much the same. "The government has lost!" the ads scream. The 43.3p rate is back, and if you rush in now, you can beat the 3 March deadline and earn a guaranteed 43.3p a unit on your surplus electricity for the next 25 years. If that were true it would indeed be a no-brainer. The price of panels has fallen dramatically, and you don't have to be a bright spark to work out that 43.3p a unit makes a lot of financial sense if you have the right sort of roof.

Trouble is, the high court "victory" does not guarantee that someone signing up now (and spending upwards of £10,000) will ever see 43.3p a unit for the electricity they generate. Chris Huhne, energy minister at the time, said the government will appeal to the supreme court. All we know is that someone rushing through an installation now may pick up 43.3p a unit. Or they may not. The only guarantee is that you'll pick up 21p a unit between 3 and 31 March. After that nothing is certain.

Cathy Debenham, who runs the independent YouGen website on which consumers post their experience of installers, says the companies telling consumers they are guaranteed a 43.3p rate are "despicable". The adverts are inaccurate and irresponsible and full of "false facts", she says. At least she's doing something about it; she has persuaded the biggest online sites in the industry to blacklist the cowboy solar companies that are exploiting confusion. "We know there are lots of excellent solar PV installers giving realistic information, and we want to make sure that it is their voices that are heard during this period of uncertainty, not the cowboys'," she says.

Count yourself lucky if you got the 43.3p. By the time the government slashed them, the feed-in tariffs were excessively generous. In effect, the subsidy came from ordinary households passed on to well-off homeowners with nice large roofs. That's partly because the cost of panels dropped faster than expected. The government had every duty to act, even if it went about it in a clunky way.

Does a tariff of 21p kill the industry stone dead? Not really. Debenham sees a future for the industry serving motivated individuals with a long-term view, and who are rather less greedy than the fly-by-night installers demanding super-returns. "I actually think it's a good thing that it's not silly money anymore," she says.
Some subsidy was necessary to the industry in its early stages, but tapering it is also essential.

Guardian Money was at the forefront in telling readers just how financially attractive the feed-in tariffs were. When the fog clears, and we have a better understanding of future tariffs, we will run our analysis again. But one thing is certain – the days of easy money are over.

This article was written by Partick Collinson and was first published on The Guardian's website on 3rd February 2012. http://www.guardian.co.uk/money/blog/2012/feb/03/feed-in-tariffs-solar-power

Q&A - Feed in Tariffs

What are feed-in tariffs?

By Rhiannon Edwards, the Guardian

A feed-in tariff is a rate of money paid by the government to homeowners, business and organisations such as schools and community groups to generate their own electricity through small-scale green energy installations such as solar panels. Under the UK scheme, which was launched on 1 April 2010 and is known as clean energy cashback, homeowners could receive up to £1,000 a year.

How does it work?

You can receive feed-in tariffs for both the generation of electricity (a generation tariff) and for giving unused generated electricity back to the National Grid (an export tariff). The level of payment depends on the technology and whether it is being fitted to an existing home, or installed as part of a new build. In the UK, future payments are guaranteed for the next 25 years for solar and 20 years for wind turbine-generated power and are linked to inflation.

How much could I receive?

It depends on how much electricity you generate and how you generate it. Anyone fitting an average-sized £12,500, 2.5kW solar photovoltaic (PV) system to their existing home will initially be paid 41.3p per kilowatt hour (kWh) generated, and those fitting the same system to a new-build house will get a slightly lower tariff (36.1p per kWh). People using wind turbines will be paid a lower rate of 34.5p per kWh for a turbine that is less than 1.5 kW (which will be the case for most homeowners) and 26.7p per kWh for a turbine that is more than 1.5kW. Households also receive an extra 3p for every kWh that they export back to the grid, on top of the money given in the first place for generation. The income is tax-free. The Guardian's Miles Brignall estimates that solar PV could generate a return of 7-10%. The Energy Saving Trust has a feed-in tariff calculator which you can use to see how much you could earn.

How do I know if I am eligible for the scheme?

The scheme is available to those who have one or more of the following technologies: solar PV panels (roof-mounted or stand alone), wind turbines (building mounted or free standing), hydroelectricity, anaerobic digestion (generating electricity from food waste), and micro combined heat and power (through the use of new types of boilers, for example). You will only qualify for the full feed-in tariff if the technology was installed between 15 July 2009 and 31 March 2010 or is installed in your home after 1 April using a product and installer certified under the government's microgeneration certification scheme. . The rate per kWh available for the generation tariff decreases every year so the rate you begin on will depend on when you join the scheme. The scheme is guaranteed to be open until 2013, when it will be reviewed by the government.

I had a solar panel system before 15 July 2009. What will I receive?

People who have already got a small electricity generation system will only receive a flat tariff of 9p per kWh. Some early adopters say they have been "betrayed" by the UK feed-in tariff because they will not receive the full rate.

Where will the money come from?

From the government, with payments made via the utilities companies. Jeremy Leggett, founder and chairman of Solarcentury, argues that each household will only see a rise of £8.50 per year in their bills but this is only a projected figure.

How does the UK scheme compare to other countries' feed-in tariffs?

Germany introduced feed-in tariffs in 2000 with the Renewable Energy Sources Act, which was based on an earlier bill covering renewable energy production. Like the UK's new tariff, the German scheme differentiates rates depending on technology type, size and site, and the rates are designed to decline over time.

The level of payments in Germany have fallen considerably since the scheme's launch, and earlier this year were controversially cut by another 15% for solar PV. France adopted the feed-in tariff system in 2001 and announced earlier this year that it would increase rates for geothermal, biomass, and solar photovoltaics integrated into the fabric of a building. A typical building-integrated photovoltaic system earns €0.58 per kWh - much higher than the UK's rate.

In Spain, feed-in tariff legislation was created in 2007. Photovoltaic electricity generation is the most popular technology in the country and the initial generous rates had to be revised after an unexpectedly high response rate led to a solar market crash.

What's the catch?

Commentators such as Chris Goodall and George Monbiot have argued that the scheme is a financially inefficient way of saving carbon compared to alternatives, such as large windfarms. One analysis by the Ruhr University suggests the German feed-in tariff cost €35bn to push solar to 0.6% of the country's electricity generation.