The Feed-in-Tariff (FiT) rate of 21 pence per kWh for 25 years is still valid in June and July this year. From August 2012 the rate will drop 5 pence towards 16 pence per kWh and it will only be valid for 20 years. This means your total Feed-in-Tariff payments over 25 years will be 40% lower from August. Because solar panel prices have dropped significantly in the last year, June and July will be excellent months to install solar. So beat the FiT cuts and enter your postcode now.
Feed-in-Tariff cuts: 5 pence and 5 years less
The government pays the FiT through utility companies and the rate is tax-free and inflation adjusted.. Any solar panels installed in June / July 2012 will receive a rate of 21 pence per kWh, valid for 25 years. Due to government budget constraints and dropping prices for solar panels, the Feed-in-Tariff will be cut from August 2012 in the following way (see first graph for overview):
- June / July: Feed-in-tariff of 21 pence valid for 25 years
- August: Feed-in-tariff of 16 pence (up to 4kWp) or 14.5 pence (4-10kWp) valid for 20 years
- November: Feed in tariff drops another 3.5% every three months from November. This could increase towards drop of 7% or even 14% in case of high consumer demand.
Total Feed-in-Tariff payments 40% lower from August
The financial impact of 5 pence and 5 years less on your solar panel FiT payments over the next 25 years is significant. It means 40% less FiT payments over 25 years as illustrated by the second graph and this simplified calculation: in June / July you get 21 pence times 25 years = 520 pence. From August you get 16 pence times 20 years = 320 pence. Hence total Feed-in-Tariff payments from August are 40% lower than June / July
The second graph illustrates this point, but includes an assumption of 3% price inflation every year. This clearly shows that by cutting the tariff from 25 towards 20 years you’ll miss out on the biggest 5 years of FiT payments if you install after August. So beat the FiT cuts and enter your postcode now to calculate the return for your own roof.