New energy tariffs could seriously affect south west

The government has announced that in six weeks, it is slashing energy tariffs paid to those who install solar panels by 50 per cent, which is very bad news for the region’s industry warns West Country accountants and financial planners Old Mill.

So far, more than 14,500 solar projects have been installed in the South West, the sunniest part of the UK and research shows that 2,000 skilled jobs have been created in the region to fit the panels with more than 380 companies are qualified to install the technology.  

But after December 12 the Feed in Tariff (FiT) will be reduced from 43.3p per kilowatt hour to 21p, and it is estimated that as a result, it will take homeowners about 18 years to break even on the cost of installing panels, compared with the current ten, making solar much less attractive.

The current rate, which is guaranteed for 25 years and was due to remain in place until April 2012, will now only be paid to those who have physically installed and registered their panels before December 12 this year. Those installed after that date will receive the old rate until March 31 and then the new rate from April 1.

Climate change and energy minister Greg Barker said the tariff cut was in response to the ‘plummeting’ price of panels, which fell from £13,000 last April, to £9,000 for a basic system and argues that without the cut, all energy customers, who each pay £3 annually towards the scheme, face paying £26 a year by 2020.

But Mark Neath, Associate Director at Old Mill says the changes will drastically reduce the attractiveness of the solar photo voltaic option, which is terrible news for the south west.

“Following a first reduction earlier in the year for larger scale schemes this announcement affects everyone down to even the domestic roof top scheme,” he said, “and as the south west has one of the biggest solar industries in the country, this is very bad news for the region.”

Mark says that the success of the FiT scheme, and faster than anticipated falls in the cost of solar panels have led to a huge number of solar systems being installed, more than the government expected which seems to be the cause of this u-turn.

“Reducing the FiT now though raises serious questions as to how the government is going to meet its commitment to reach agreed levels of renewable energy output,” warns Mark, “and moving the goalposts for a second time ahead of the scheduled review cannot be good for the industry or for the financing of renewable schemes.”

However, points out Old Mill, the FiT for wind and hydro have not been affected by the latest announcement, so with solar becoming a less attractive renewable option, they are certainly worth considering.

Below, are the proposed new tariff rates:

*These are the current tariffs, which DECC are not proposing changing and which, like all other current tariffs, will be adjusted in line with the Retail Price Index from 1 April 2012.

For more information please contact Mark Neath on 01392 280337