If you were planning on putting in a solar panel array and funding it via the government’s feed-in tariff (FIT) payments, you’d better think again – because the payment just got cut down by 50%, starting on December 12 of this year.

Back in June 2011 the government announced that FITs for large-scale solar power installations were going to be cut – and cut drastically – in order to preserve funds for households.

Opponents of the cuts said that this move would crush the fledgling solar panel industry and mean that community schemes for housing associations, schools and hospitals could not go ahead, as well as locking the UK in to more expensive energy options in the future.

The ‘reform’ was tabled in February but then delayed by a long consultation, meaning that when it finally became policy there were less than two months left for installations to be certified as on-line and therefore able to qualify for the FITs. That’s not long, given that large installations take considerable planning and are not created with the same speed as a 10-20 panel domestic array. People who had already paid for planning permission, deposits to the installing company and so forth but who were unable to complete by the beginning of August‚ lost out. For installations of between 50 and 150 kWh, the FIT payments dropped from 32.9p per kWh to 19p. For larger installations of between 250kw and 5 megawatts it dropped from 30.7p per kWh to just 8.5p.

So, very bad news for a lot of people – not just for those who were planning an installation or already paying for one, but also for the many who would have benefitted from the power generated.

solar panels, image

However, everything still looked rosy for people considering a domestic installation, as the still generous FIT levels were not due for review until the end of March 2012 (and annually thereafter) and the accepted wisdom was that they would only drop slightly in order to keep the carrot dangling.

But not any more, alas, because of the new announcement that as of December 12, 2011 FIT payments for all domestic installations will be halved. So, again they’ve made life extremely difficult. Only those lucky people who were at the point of paying a deposit on a particular installation have even a chance of making the new deadline.

Amazingly enough, my wife and I might be two of the lucky ones.

We have been investigating domestic installations for several months now, having a small but adequate roof that’s able to take the additional weight and is angled only 5 degrees away from due south. Better yet, it’s pitch is exactly 30 degrees, which is considered just about perfect. And, aside from clouds (and yes, we have quite a few of them as we live in Wales!) there’s nothing between it and the sun at any time of year.

Only last week we decided that our research was complete. Our daughter is a qualified electrical engineer based in Texas who specialises in alternative energy with a specific focus on solar power. We had sent her the details of all the quotes we received to find out just how the panels, inverters etc. on offer stood up to industry investigation.

The differences between the systems offered, and the service provided by some of the companies we spoke to, left much to be desired. Some companies thought that there was no need to consider a ‘structural survey’, i.e. to find out if the roof could actually support the additional weight of the panels, until after the contract was signed. Others decided that the inverter, which gets quite hot and should be easily accessible, could be mounted against a wooden beam up in the attic. And the prices varied hugely: for an array of roughly 3.8kw we received quotes between £10,000 and £14,000.

According to the government, the reason they cut the FITs for large-scale installations was that they were paid by the energy companies themselves, who then passed it right along to all their customers as a small amount added to their bills. So, cutting them meant cuts to the energy bills most of us pay.

The new reason given for slashing the FITs for the domestic market is because the price of solar panels has dropped so much recently. Well, it has dropped, and is likely to continue to do so: in 2009 solar panels cost roughly $2 per unit of generated power, and right now it’s around $1.50.

You would think they would have checked this, wouldn’t you? But maybe they just didn’t look at the way things were headed when FITs were introduced in April, 2010.

The Solar Trade Association commissioned a report from Ernst & Young’s energy and environmental advisory unit which found that the falling price of panels, together with projected increases in fossil fuel prices, ‘could make large-scale solar installations cost-competitive without government support within a decade.’

So, that’s OK then. We only have to sit through another decade of escalating energy costs before we don’t actually need FIT payments in order for a large-scale solar installation to be cheaper than ‘regular’ power. But that doesn’t help domestic installations, and to knock the UK solar industry out like this will have some serious long-term repercussions.

The Committee on Climate Change (CCC), the government advisor on things solar, said recently that solar power remained too expensive to warrant serious consideration in the short term and that the UK should instead ‘buy in from overseas later’. Contrasting this view, Ben Warren, the leading author of the Ernst & Young report, pointed out that creating a sustainable market leads to cost savings and drives economic benefits in both tax income and job creation.

Whatever the reason, and whatever the outcome, it’s hard to feel any confidence at all in a government that so easily pulls the rug out from beneath stated policy and performs a swift U-turn on what had previously been promised – especially when developing our renewable energy resources is so clearly the way to go.

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