The recently proposed changes to the FIT rate (Feed in Tariff) a predicted to reduce the FIT tariff as of January 1 2016, but, despite reduced rates, homeowners can still benefit from solar panels. While the Feed in Tariff is set to drop dramatically, by a now total of 87% since the launch of the program five years ago, you will still get some income from the tariff, and you will still benefit in other ways. If you’re wondering why you should install solar panels on your home, the following information can help you.
Why the Cuts?
Amber Rudd, secretary of the Department of Energy and Climate Change wrote that the primary goal is to provide the most cost effective green energy solution possible for the UK as a reason behind the cuts. The runaway success of the program was also listed, as the UK is expected to reach its target goal of 750,000 installations by 2020 sometime near the end of 2015, which could put the program considerably over budget if solar continues to expand at the same rate by 2020. At the same time, cuts are being made to almost every other type of green energy in the UK, while energy production methods like fracking are receiving additional funding. In addition, the cuts of 87% to the FIT rate will likely only save the average homeowner around €6 per year, which is not much by any standards. Experts suggest that the dramatic reductions to the Feed in Tariff could reduce the number of households installing solar by 825,000 over the next 25 years.
For those reasons, the cuts are facing heavy criticism from nearly every part of the solar industry, including foreign solar firms.
Installing Solar Panels Without Losing Money
Probably the best news for homeowners is that subsidies are no longer 100% necessary to make a solar array affordable. While you can make your returns back in around 7-10 years with the current FIT rates, the cuts won’t mean that you’ll be facing a loss. In fact, with rising costs of traditional electricity, and falling costs of solar, your ability to earn your money back quickly with nothing but solar panels, even without the FIT. Currently, a home installation provides power at about the same rate as most electricity, at about 15p per kW hour for a normal 4 kW array. Large solar farms provide this same power for about 11p per kW/hour. Because the costs of solar panels are still dropping, most experts suggest that costs will fall well below those offered by traditional power companies, with expected rates hovering between €20-€25/MWh depending on the cost of the solar array. In South Europe, solar is already considerably more affordable per kW hour than standard electric.
FIT Still Exists
While the Feed in Tariff will be greatly reduced after the first of the year, tariff isn’t going away and you will be able to continue to earn off of it. PV systems of 10kW capacity or below will earn just 1.63p kilowatt-hour, but it’s still something. The current FIT rate runs between 11.7 and 12.88 pence per kW hour depending on the rating of the building. This will drop the average payout for a 4kw home installation down to around €65 per year, which will increase the time it takes to pay off a solar array. Even at 20 years to pay off, solar panels will generate a small amount of revenue, because the average modern panel has a 25-30 year lifespan. However, with consistently falling costs of solar panels, the cost of an installation will continue to drop. Prices have already dropped 80% in the last 5 years alone, and are set to keep going down as new technologies and cheaper manufacturers hit the market.
How to Go About Installing Solar
With FIT rates set to drop, the most important thing to keep in mind should be cost.
- Compare as many solar panel installers as possible or use our solar comparison page to get 4 quotes from trusted suppliers.
- Shop for budget brands, and don’t be afraid to consider Chinese and Korean panels providing they offer an adequate warranty.
- Use our solar panel calculator to accurate and up to date predictions on how much you can earn.
- Consider a larger system, it’s a bigger upfront investment, but will provide more power and pay itself off more quickly
- Consider installing panels as quickly as possible to benefit from the current FIT rates for as long as possible
- A battery storage system allows you to store power rather than feeding it back into the grid.
- If your not ready to install now, keep checking our homepage for info on the current viability of solar panels.
Installing solar is for more than just your wallet, you’re also helping the environment by reducing carbon emissions. With lowered FIT rates, this will be more important to keep in mind, because your panels will take longer to pay off. However, with the right research, you can still maximize your investment by choosing the right panels and the right installers, so that you pay off as quickly as possible.