Time Running Out To Install Solar Panels Before 23% Feed-In Tariff Cut - Warn The Eco Experts

June 25, 2012 - PRLog -- Reporting on the UK solar photovoltaic scene, The Eco Experts' (http://www.theecoexperts.co.uk) opinion is this: it's easy to see the benefits of solar PV panels. Not only do solar users not have to pay someone else for electricity, they actually make money from energy production, and increase the value of their property.

Unfortunately, from August 1st the government's feed-in tariff is being cut by 23%. Instead of being able to earn up to 21p per kilowatt hour (p/kWh) those switching to solar will earn a maximum of just 16p/kWh.

To benefit from the current higher FIT regime an applicant must meet the eligibility date. To do so, the FIT supplier must receive a valid application before August 1, 2012. An application is only valid after a solar PV system has been installed. It is thus vital that those wanting to receive the 21p rate get their system installed and application in as soon as possible.

But, there is still time to make a solid return from Solar PV, according to The Eco Experts. Both domestic and commercial tariffs are being cut, so whether you're a homeowner or a businessperson this applies to you.

Many argue 16p/kWh is still a profitable rate of investment, but anyone who moves now and installs by August will be looking at potential extra return of around £8k over the 25-year course of the agreement.

Not only is the feed-in tariff being cut from 21p to 16p, but the length of the incentive is being snipped from 25 years to 20 years. Earnings will still be tax-free and index-linked, but from August new solar users will earn less money and for not as long. The advice from The Eco Experts is to learn from the thousands of existing case studies and invest in PV, for an ROI of around 9% - three times the 3% or so offered by building societies.

Cumulatively, between the months of March and August 2012, the feed-in tariff will have been slashed by a total of 63%. As an incentive it was always intended to be attractive to early birds. That era is drawing to a close, and although from August it will still represent an investment, it will no longer be the tempting 21p deal it is at the moment.

From August, Government has made the decision to raise the rate of export, which The Eco Experts and many others in the industry suspect is to create confusion, and deter people from acting now to attain the higher 21p tariff rate.

Traditionally the feed-in tariff is profitable because of the electricity PRODUCED - not because of the electricity EXPORTED. A 21p tariff rate is much more profitable than a 4.5p/kWh export rate.

Summary of the changes happening on August 1, 2012:

- Maximum Feed-In Tariff rate dropping by 23% - from 21p/kWh to 16p/kWh
- Payback period is being reduced from 25 years to 20
- Export Tariff is increasing from 3p to 4.5p/kWh
- FIT rate is determined by the eligibility date, which occurs after a system has been installed

As a reminder to domestic and commercial ‘might-be' customers, here is some essential information on installing PV panels and how they can affect the energy efficiency of a property.

Solar panels don't require heat to function: they are powered by sunlight. Unshaded south-facing rooftops are best, but profitable solutions can work well for east and west facing rooftops. Each kW panel takes up 8m2, which is roughly the size of two saloon cars. Domestic systems are typically 3kW or 4kW in capability. Commercial systems can be significantly larger.

Another recent development to the feed-in tariff is that the energy efficiency rating of the property will affect the tariff. Any property with an EPC rating (Energy Performance Certificate) of less than D will not be eligible for the full tariff.

The EPC decision is meant to incentivise people to make energy efficiency improvements to their property. You may have heard about the Green Deal that is coming in October – a finance initiative will be launched for precisely the purpose of retrofitting the nation's homes and combating fuel poverty.

The significance of the Green Deal to the PV feed-in tariff is that if the Green Deal increases the EPC rating of a property it can activate the higher tariff rate. Being penalised for a low EPC rating can demote a 21p tariff rate to 8.9p and a 16p tariff rate to 7p.

The benefits of solar panels are as follows:

- A massive reduction in energy bills for the full lifetime of the panels (can be up to 50 yrs).
- The ability to earn, primarily from production, to a lesser extent from exporting to the grid.
- A return on investment that is tax-free and index-linked for 25 years. Or 20 years, if you install after August 1st.

http://www.theecoexperts.co.uk/