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Feed-in Tariffs and solar panels: why policy could harm renewables

The Feed-in Tariff  (FIT) is the government scheme that pays homeowners for generating their own energy from renewable sources such as solar panels or wind turbines.

The current FIT rate is due to drop from 21p per kWh to 16p per kWh on the 1st of August – the second time the rate has fallen since the scheme was launched. This decrease in payments has been blamed for consumer confusion around the scheme and even for dissuading potential owners from buying solar panels altogether.

feed in tariffs

The Feed-in Tariff means you are paid for generating your own energy so you can earn money and cut your energy bills.

Our research found that:

  • Almost three in ten people (28%) blame the government’s confused energy policy for the latest reduction.
  • Although six in ten consumers (64%) still agree with the FiT scheme, the constant chopping and changing has left people confused and dissuaded from installing solar panels whatsoever.
  • Just four in ten (40%) of those with solar already installed can correctly identify the current 21p rate.
  • Less than two in ten (19%) of those who don’t have solar power know what the current rate is.

More worryingly, as many as four in ten (40%) of those who don’t have solar panels installed have been put off buying them by changing Feed-in Tariff rates.

So we asked those who were dissatisfied with the FiT scheme why they were no longer interested in solar panels. Almost half (47%) said they blamed on ‘constantly shifting goalposts‘ of the changing rates, while two in ten thought the Feed-in Tariff scheme is simply too complicated (this rose to a quarter (25%) amongst those who already have solar panels).

Government changes to the FiT rates seems to have resulted in mass confusion – over a quarter of those who don’t have solar panels say it’s because they can’t trust the government to maintain the FIT scheme and 15% say they don’t understand the scheme. 17% are concerned that the rate will have dropped by the time their panels are installed.

Today, almost 250,000 domestic properties in the UK have solar panels fitted, a trend the government is keen to encourage. However, the Feed-in Tariff has become the main focus behind purchasing solar panels – a damaging trend, says Kevin Sears, energy efficiency expert at uSwitch, who pointed out that: “Solar energy is looking like a real success story for consumers, with many getting solar panels installed in direct response to the high cost of household energy.

“However, the benefits are being overlooked or undersold because of the focus on the Feed-in-Tariff scheme and the constantly changing goalposts – this is putting many consumers off.

“I would urge the government to show support to solar and to the many consumers who would like this opportunity to reduce their energy bills. The government can do this by showing absolute clarity, determination, vision and drive so that people can start to feel complete confidence in making this investment.

“Although the FIT rate will be dropping to 16p on the 1st August, this still represents a healthy return on investment, especially as the installation cost of solar has dropped from £10,000 to around £7,000. And of course, the fact is that installing solar will cut your household energy bills and protect you from the impact of future price rises. It’s important that this avenue is kept open as over three quarters (78%) of those who have already had solar panels fitted installed them to protect themselves against future energy price hikes while 62% needed to save money on their energy bills. Given this, it’s pretty clear that consumers cannot afford to be switched off solar.”

Are solar panels still good investment? 

– Solar panels still represent a good investment despite fluctuations to the Feed-in Tariff rates- and with UK interest rates still so low, it can offer a better investment than more traditional avenues, such as savings accounts.

– At just £7, 000 the cost of solar panels has dropped considerably and can help you save as much as 50% off your energy bills

– Sick of energy suppliers raising their prices? Generating your own energy is a great way of safeguarding your home from the worst of the energy price changes.

Learn more about solar panels.

Learn more about the Feed-in Tariff rates

Discussion: What do you think? Are solar panels still an investment or are you fed up of all the changes? What can the government do to make you more likely to buy into renewable energy?