UK Government changes to Feed-in Tariffs – new and proposed
In January 2012, the UK Government appeal against a High Court decision ruling that the Solar FITs Fast Track review was unlawful was unsuccessful. However, this is not the end of the matter: the UK Government are currently seeking permission to appeal the decision to the Supreme Court. In light of this they cannot rule out the possibility that lower tariffs (21p) could be applied to installations which became eligible for FITs on or after the proposed reference date of 12th December 2011. As such there is still uncertainty over which tariffs householders will get if they install between 12th December 2011 and 3rd March 2012.
Summary of changes from 3rd March 2012
Consultation on proposed changes for solar PV from 1st July 2012
FAQs, further information and tools
Update on 10th February 2012
On 9th February 2012 the Government published a response to their consultation of 31st October 2011 and two new consultation documents on the Feed-in Tariff as follows:
- The UK Government response to the consultation on FITs for solar PV. Outlining a new energy efficiency requirement for FITs. From 1st April householders wishing to receive FITs will need to show that their property has an EPC band D or higher.
- A consultation on solar PV cost controls. This sets out the UK Government's proposals for six monthly degressions for solar PV tariffs, to ensure the UK Government’s “commitment to a stable, predictable future for solar PV and for the whole FITs scheme”. The consultation closes on 3rd April. A key consequence is that from 1st July 2012 the FIT tariffs for solar PV are likely to drop again.
Go to the DECC website to read the Consultation on Comprehensive Review Phase 2A: Solar PV cost control
- A consultation on tariffs for FIT technologies other than PV. This sets out the revised FIT rates for technologies other than PV. The consultation closes on 26th April.
Go to the DECC website to read the review Consultation on Comprehensive Review Phase 2B: Tariffs for non-PV technologies and scheme administration issues
Our latest advice
For householders having a Solar PV system of less than 4kWp installed:
- Regardless of what some installers may say there is no guarantee that householders will get the higher (43.3p/kWh) rate for installations with an eligibility date between 12th December 2011 and 3rd March 2012. Customers who install on the assumption of the higher rate do so at their own risk.
- The actual tariff applied to installations with an eligibility date between 12th December 2011 and 3rd March 2012 won’t be confirmed until the legal process has been completed. The Government has 28 days from the judgment to lodge an appeal with the Supreme Court.
- Householders should plan on the basis that at the very least they will get 21p/kWh.
- Householders with an eligibility date after 3rd March 2012 will receive 21p/kWh.
- Householders with an eligibility date after 1st April 2012 will receive 21p/kWh provided that their home has an Energy Performance Certificate (EPC) Band D or better (A being the best). Homes which do not have an EPC Band D or better will get will get a reduced generation tariff rate of 9p/kWh.
- For householders with an eligibility date after 1st July 2012 it is proposed that the rate should between 16.5p/kWh – 13.6p/kWh. The exact rate will depend upon the amount of solar PV installed between March and April 2012.
Note: The eligibility date is usually the date that your FIT supplier (also known as the FIT licensee) receives a valid application for FITs, which is likely to be after the date your solar PV system has been installed. For more on this subject, see What is the definition of the eligibility date?
Introduction
The UK Government are reducing Feed-in Tariffs (FITs) for new solar photovoltaic (PV) installations. They were intending to do this for installations with a reference date from 12th December 2011 but as a result of legal action against the Government these changes could be postponed until 3rd March 2012. If you install solar PV and your FITs application was received by your FIT supplier (also known as FIT licensee) on or after 12th December 2011, you could be affected by the proposals.
Legal action against the UK Government
As a result of legal action taken against the UK Government by Friends of the Earth and several installers, a High Court judge has ruled that the Government’s actions were “unlawful” with respect to the reference date of 12th December 2011. The UK Government is currently in the process of appealing this decision (the original appeal was unsuccessful with the government now seeking permission to appeal to the Supreme Court). Overall, the likely outcomes are:
- If the Government appeal is successful (assuming they do appeal to the Supreme Court) – the reference date (also known as eligibility date) of 12th December 2011 remains and consumers will receive 21p/kwh for all installations with an eligibility date from that date.
- If the Government appeal is unsuccessful (or if they decide not to appeal to the Supreme Court) – the reference date is 3rd March 2012 and consumers should assume that the rate is 21p/kWh after this date.
The table below summarises the possible outcomes of the Government appeal and implications on tariff levels according to the reference (eligibility) date.
| Result of UK Government appeal (assuming they do appeal to the Supreme Court)Solar PV tariffs based on systems <4kWp | ||
| Eligibility date(Dates when they actually apply to receive FITs ) | Successful | Unsuccessful |
| Before 12th December 2011 | 43.3p/kWh for 25 years (not affected by these changes) | |
| 12th December 2011 – 2nd March 2012 | 43.3p/kWh until 31st March 2012, 21p/kWh after 1st April 2012 (consultation proposal) | 43.3p/kWh until a date to be specified, for 25 years |
| 3rd March 2012 – 31st March 2012 | 43.3p/kWh until 31st March 2012, 21p/kWh from 1st April 2012 | |
| 1st April 2012 – 1st July 2012 | 21p/kWh plus new requirement to show property has an EPC band D or above. 9p/kWh if property cannot achieve EPC band D | |
| 1st July 2012 on | 16.5p/kWh – 13.6p/kWh. Rates will depend upon the total installed capacity between 3rd March and 30th April 2012. This is only a proposal and is still under consultation. EPC band D or above requirements still expected otherwise tariffs drop down to stand alone system rates. | |
We recommend that consumers planning to have a solar PV system installed before 3rd March plan on the basis of 21p/kWh (they should not assume they will get the full 43.3p/kWh rate if they install before then as this depends on what happens with the Supreme Court). However, if the ruling is upheld against the government then householders with an eligibility date before 3rd March will be eligible for the higher (43.3p/kWp) rate over the lifetime of the technology (25 years).
Summary of changes from 3rd March 2012
Changes to FITs which affect householders most from 3rd March 2012 are:
- A reduced rate of 21p/kWh for solar PV installations of less than 4kW from 3rd March 2012.
- New domestic energy efficiency requirements - from 1st April 2012 a domestic property must meet a specified minimum energy efficiency requirement to be eligible for the highest available tariff under the FIT. The Government have set this at Energy Performance Certificate (EPC) rating D or above. If it does not meet these energy efficiency requirements, the Solar PV installation may receive the lower tariff of 9p/kWh. This requirement to reach a minimum energy efficiency standard will also apply to extensions of existing PV installations. There are no transitional arrangements. Even if the PV installation is not on a building or on a building for which an EPC can be obtained, this condition remains so long as the solar PV system is wired to provide electricity to a building that it is possible able to obtain an EPC for. The Government state that for the 51% of dwellings that do not already meet the required standard, reaching a D rating may require the installation of some, but not all of the following measures:
- loft insulation
- cavity wall insulation (but not solid wall insulation)
- heating controls
- hot water cylinder insulation
- installation of a replacement boiler.
The table below compares typical income and savings made for an average solar PV system in the UK based on our Solar Energy Calculator:
| FIT rates | Total annual earnings and savings with a 3kW system | Simple payback (years) |
| Previous 43.3p/kWh ('higher tariff') | £1,240 | 8 |
| Proposed 21p/kWh ('lower tariff') | £670 | 15 |
Notes
- New applications (on or after 12th December or possibly 3rd March 2012 depending on the outcome of any appeal) will still receive 43.3p/kWh rate but only for the remainder of current financial year (up to 31st March 2012). After this date the rate received will be the lower tariff rate. The difference in the higher and lower tariff rates for this short period have not been included in the payback calculations as the effect is small and will also depend on when the application is made.
- 3kW system with an installation cost of £10,000.
- Total earnings and savings include income from the generation tariff, export tariff on 50% of total generation and 25% of generation used on site.
- Simple payback will depend on capital cost so the simple payback periods may vary depending on quotes received. The cost of solar PV has come down significantly over the years so we would expect the simple payback period to come down gradually.
- Annual generation is taken as 846 kWh/kWp.
Consultation on proposed changes for solar PV from 1st July 2012
Proposed changes to the FIT which may affect householders most from 1st July 2012 are:
- The Government are proposing further reductions to solar PV tariffs with an eligibility date from 1st July 2012. They have proposed three alternative tariff tables, the choice of which would depend on the volume of solar PV installed in March and April 2012. The rates in the tables are between 16.5p/kWh and 13.6p/kWh.
- A proposal that the solar PV tariff homes that do not reach an EPC band D or better should receive the same rate as stand-alone solar (currently 8.5p/kWh) rather than the 9p/kWh for installations with an eligibility date from 1st July 2012.
- That from 1st July 2012 that the FIT should be set at a level that would deliver returns broadly within the range of 4.5 to 8% under central cost assumptions rather than a specific target of 4.5 to 5%.
- The Government are also asking as part of the consultation exercise whether the period for which the FIT is paid should be reduced from 25 to 20 years (relevant to PV) and whether the amount paid by way of export tariff should be increased to new entrants to the FIT scheme (although this may then lead to further reductions to the generation tariff).
Consultation on proposed to changes to FIT rates for renewable electric technologies other than solar PV from 1st October 2012
The Government are consulting on changes to the FIT rates for renewable electric technologies other than solar PV from 1st October 2012 as follows:
| Technology | Tariff band (kW capacity) | Current tariffs (no change to current policy) | Proposed tariffs from October 2012 |
| Hydro | ≤15 | 22.0p/kWh | 21.0p/kWh |
| >15 to ≤100 | 19.7 | 19.7 | |
| >100 to ≤2000 | 12.1 | 12.1 | |
| >2000 to ≤5000 | 4.9 | 4.5 | |
| Wind | ≤1.5 | 35.9 | 21.0 |
| >1.5 to ≤15 | 28.1 | 21.0 | |
| >15 to ≤100 | 25.4 | 21.0 | |
| >100 to ≤500 | 20.7 | 17.5 | |
| >500 to ≤1500 | 10.4 | 9.5 | |
| >1500 to ≤5000 | 4.9 | 4.5 | |
| Anaerobic digestion | ≤250 | 14.7 | 14.7 |
| >250 to ≤500 | 13.7 | 13.7 | |
| >500 to ≤5000 | 9.9 | 9.0 | |
| Micro-CHP | ≤2 kW | 11.0 | 12.5 |
These tariff levels are indicative only. Official tariff rates for 2012/13 will be calculated and published by Ofgem by 1st March 2012.The Government is also consulting on whether the new requirement for an EPC Band D or better which is being introduced for solar PV installations from 1st April 2012 should be applied to other technologies supported through the FIT. They state that "We proposed to revisit this question in the future, in the light of emerging policy on energy efficiency and the Green Deal."
FAQs, further information and tools
The Energy Saving Trust has developed a Solar Energy Calculator which includes the newly proposed rates of 21p/kWh. This calculator will let you see how much you could generate and earn both before and after the proposed changes. For renewable energy technologies that are eligible for FITs other than solar PV you should use our cashback calculator. Use the Solar Energy Calculator. Use the Cashback Calculator. Find out what other renewable technologies may be suitable for you by using the Home Energy Generation Selector.
Scotland
In Scotland, zero-interest loans are available to householders towards the cost of installing renewables systems. Loans of up to £2000 are available with a maximum repayment period of 4 years. In some areas zero-interest loans of up £4000 are available for electricity generating renewable technologies. Find out about financial support available towards the cost of installing solar PV in Scotland.
For free, independent and impartial advice, you can also speak to one of our advisers over the phone: just call 0800 512 012.
What is the definition of the eligibility date?
- The eligibility date is the date from which an installation becomes eligible for FITs payments.
- For the vast majority of renewable electricity systems (all that have a declared net capacity of 50kW or less), this will be the date your FIT supplier (also known as the FIT licensee) receives a valid application for FITs. This will be after the date on which your renewable electricity system is installed.
- It is therefore essential that consumers ensure their application is sent to their FIT supplier promptly. For absolute certainty consumers should consider sending applications via special delivery.
- Find a list of FIT suppliers at the Government's OFGEM site.
- We recommend you contact your FIT supplier as soon as possible to confirm the requirements above and make sure you know exactly what information they require from you and when they need to receive it by.
