Now or Never? When to install Solar Power in 2012

by Jarrah Harburn on April 27, 2012

What can be said without hesitation is that solar power in the UK has been through a tumultuous time over the last 12 months . Rapid growth offset with grinding lows; from free solar to 20% returns on investment and megawatt installations to a solar powered bin – it’s had everything. Placing this aside what we still have is a fantastic opportunity for thousands of British home-owners and business operators to make money from solar in the UK. However the reality is that we are facing yet another feed-in tariff deadline on the 30th of June 2012 – one that appears to be the worst one yet. Read on to know why you need to consider solar now, if ever.

Let’s examine the June 30th cuts and what to expect.

Feed-in Tariff Reductions for the 30th of June, 2012

Depending on the following installation rates the feed-in tariff will be reduced from 21p per kWh (kilowatt hour) accordingly.

<150mW = 16.5 p

150mW to 200mW = 15.7 p

>200mW = 13.6 p


These initial figures were being used for installs between March 3 and the end of  April by the reporting sources of the Department of Energy and Climate Change (DECC). Installation rates for solar power in the UK in April were low, numbering little over 1,200 solar PV installs. This will hopefully mean the highest rate of 16.7p is set and maximum returns are locked in for the future. Once this base rate is set, the DECC has said it will review the rate every 6-12 months to ensure it is not overly generous.

But this is all ultimately speculation and forecasting – it will be little consolation to those who miss out in the long run. Solar power in the UK is expected to become equal with brown and nuclear sources of energy as soon as 2020, with tariffs becoming obsolete as soon as 2015. However before then, the tariff rates proposed for post June 30th will continue to be reduced every 6-12 months based on uptake. If solar power is to remain viable in the time between 2012 to 2015 then the tariffs need to remain on par with the procurement costs to maintain attractive returns.

How the FiT Reduction will Affect ROI

At the moment with 21p we are seeing 4kWp solar PV installations advertised for POUNDS <6,500 including VAT. These returns are exceptional – well above 10%. The reality is that even if the tariff reductions are favourable at 78%, distributors and manufacturers will struggle to lower proportional solar PV wholesale discounts before mid 2013. This leaves a good 12 month period when returns dip far enough below 10% to really slow down the industry and affect thousands of jobs .

The feed-in tariff is vital is preserving the industry before solar pv becomes cost competitive with energy resources such as coal and gas. We now know this; however what about the end-user and their consideration of a purchase? Well quite simply the best advice is now or never. The feed-in tariff locks down for 25 years when an installation is registered. So a solar PV system installed before June 30th is literally worth thousands of pounds more than one installed afterward.

Are you In?

Where does this money come from? One of the beautiful aspects to renewable energy that is supported with a feed-in tariff is the energy companies foot the bill. True, they pass this on to their customers, but all that supports is the notion to be one of the ones with a solar power installation as opposed to one without. Renewable energy is going to increase its stranglehold on environmentally friendly support mechanisms for western and developing societies; you can either be on board or watching from over the road.

Written by Jarrah Harburn

T: 020 7205 2267

© 2012 Solar Selections Ltd

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