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The future remains bright for Solar, despite FiT reduction

Posted on: 2011-10-30 19:26:49

Has the FiT Scheme been killed off? 

Boom or bust?  PB Energy Solutions looks at the latest storm on FiTs and the concern of many that the reduction will ‘kill off’ the solar industry.

The Government backed FiT scheme has been responsible for the massive growth in PV, seeing returns reaching double figures.  With interest rates for savers at an historic low, the Government has revisited the subsidy levels and in leaked documents, the FiT is set to reduce by 55% to 21p. 

So what are the reasons for lowering the FiT?

  1. The cost of installing PV has plummeted since tariff levels were set and the sector is passing on these price reductions to consumers - tariff levels need to reflect the reducing prices.
  2. The need for coherence across the Green Agenda - the Green Deal and its energy efficiency measures, FiTs for Microgeneration and the RHI.
  3. Lowering the tariff means money can be spread more widely and allow more people to benefit.
  4. Addresses the bumper returns for a lucky few and to incentivise the majority.
  5. To end returns of more than 12 % for solar panel installation in the least sunny locations in the UK. 
  6. The FiT scheme is not sustainable in monetary terms – it is literally burning up the budget. 
  7. The whole-house approach prioritises energy efficiency prior to low-carbon heat and electricity technologies.

It is feasible to say that this is not all doom and gloom for the solar industry.  Far from it! 

These are some of the reasons why the boom will continue and why the future will remain bright for solar installers:

  1. In the long term, there will be more customers not fewer.
  2. The 100,000 FiTs installations so far is only the beginning - lower tariffs mean uptake can grow in a more sustainable manner, the microgeneration sector being the catalyst for green economic recovery.
  3. A whole-house approach prioritises energy efficiency - no more PV subsidy for energy inefficient buildings is a new green business opportunity and will encourage companies to diversify into new sectors.
  4. Rising fuel bills will trigger more interest in solar technologies.
  5. The Green Deal, the biggest home improvement plan since the Second World War will provide financial incentives for the installation of solar.
  6. The Government is supporting solar thermal and are keen to see a greater integration of solar thermal and PV offerings in the marketplace.
  7. Renewable energy is here to stay – fossil fuel is running out, fact!
  8. Initial calculations show that the reduced FiT rate of 21p per kWh will still provide a decent return on investment at around 10%.   

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