One of the key incentives for private individuals and businesses considering cutting down on their energy usage by adopting solar power was the promise of government subsidies for those who took the step of installing panels in their homes or places of work. As of 1 August, however, the money given to anyone who installs solar panels – called a 'feed-in tariff' is set to be cut from the existing rate of 21p per kWh to just 16p – a reduction of around a quarter. In addition, the feed-in tariff will now only last for 20 years instead of the previous 25 years.
Not all bad news
The announcement that the subsidy is set to be dramatically lowered may sound like a death knell for the future of solar power, but it's rather more complex an issue than it may at first appear. The falling subsidy rate reflects the decreasing costs of installing the solar panels into homes and businesses – the prices were initially set to reflect the costs when the scheme began back in 2010. The Department of Energy and Climate Change have calculated that at the altered rates the subsidy should still amount to a return of around six per cent for those who opt for solar power – previous figures at the old rates worked out at seven to 10 per cent.
Rather than being up in arms about the changes to the scheme, green campaigners have been waxing positive about the improved clarity and openness which this announcement means for people considering solar energy, arguing that one of the main barriers to a wider-scale adoption of the clean energy was the cloud of uncertainty surrounding the future of subsidies. This sentiment has been backed up by the statement from the Department of Energy and Climate Change who were quick to hail the deal as a new era of certainty for solar power.
Some clouds on the horizon
Despite the positive noises being made by both sides, and the fact that the reduction is mostly indicative of the fact that solar energy is now cheaper to implement, there are a still a few worrying signs for solar fans. Since the initial announcement in April that the subsidy was to be cut, installations have dropped by a pretty hard-to-ignore 90 per cent, but admittedly that was immediately following a controversial and 'illegal' halving of subsidies from 43p per kWh to 21p per kWh.
It's been far from simple getting to the current figure either, with the government having initially planned to halve the subsidy rates only to be hauled before the courts by solar companies and other eco-groups, losing three cases before arriving at this new deal. Whether this new certainty will prove attractive to those on the fence remains to be seen, but the end of high-profile legal wranglings are surely to be celebrated, and the eventual clarity over the payments greeted with relief.
Would the reduced rates put you off installing solar panels, or does the new certainty over payments make it a more attractive option? Let us know your thoughts.