How can you get the full 43.3p/kWh rate for solar?

Hot off the press I’m sharing a guest post from author David North. David is a freelance writer who has published on both cycling and sustainability. He also keeps a blog about hiscycling adventures around Britain.

Today he’s talking about upcoming changes to the Government’s Feed In Tarrif for solar installations. 

For a few years until last week people who have solar installed are paid 43.3 pence per kwh (kilowatt hour) generated for 25 years, plus they save money on their electricity bill as they use less from the grid, and they will probably sell some of what they haven’t used into the grid for which they get a further 3 pence.

Making money from solar

This means that a home with good solar panels can generate around 1000 to 2000 kwh a year depending on the size of their roof and its direction. Therefore, they could receive £430 to £860 in Feed in Tarrif (FIT) for generation, save £100 or so on their energy bill and make another £50 on selling to the grid.

All in all this has been very good for those who can afford the outlay for installation. Let’s say it costs £10,000 for a 2kwp system which will give you an annual return, including savings on the electricity bill of about £800. Over 25 years that’s £20,000, though nobody seems to mention the fact that you’ll probably need to replace the inverter (the device that converts the power from the panel to usable electricity) at least once and one of those would probably cost about £2,000 to buy and install, possibly more.

Feed In Tarrif to drop

However, the govt have just dropped the FIT to 21 pence and with effect from 12 December 2011.

This has shocked, not to mention scared many. Those consumers who have recently ordered a solar installation believing they would get 43.3p per kwh for the next 25 years might end up with 21p, whilst the huge cut could kill off the domestic solar market. Lots of businesses that set up in recent years or invested in new staff, vans, equipment, training etc will probably have to make redundancies or even go out of business.

Meet the deadline for FIT

The Energy Saving Trust, recommend you get your MCS certificate from your installer ahead of the reference date deadline to ensure you get the full 43.3p/KWh rate. They suggest no later than 8th December which is the latest day they recommend posting application (unless the FIT supplier accepts electronically so you need to check with them).

As installers are not obliged to give the certificate any sooner than 10 working days, the EST recommend having your system installed before 24th November to be on the safe side (10 working days back from 8th December) to be compliant with the installer’s MCS obligations. They recommend asking installers for MCS certificate as soon as possible - many should be able to provide this within 24 hours.

Installation date for solar

If your installation is going to be installed after 24th November but before 8th December then you must get assurances from your installer that you will receive your certificate in time. Otherwise you may lose out on the 12th December deadline. You need to ensure that the installation date is clearly set out in the contract, and in this way it will be a contract term. Householders should be aware of this risk.

Solar installers who try to tell folk that they can get the job done before the 12 December cut off may get the installation done but that doesn’t automatically qualify the owner to the 43.3p FIT. As the EST point out, there is paperwork that needs to be done and submittted to the homeowners electricity supplier and that has to be veriified before you get the FIT. So would you gamble £8,000+ of your savings on whether a clerk at eon or Npower is going to rush your paperwork through in time? You can’t submit the paperwork until 5 days after installation and all is up and running.

Will you lose money with solar?

So, if you end up with the 21p rate you will be lucky to get you money back, based on my calculations using the Energy Saving Trust’s (EST) calculator (and they’re very generous with their estimated installation costs which are much cheaper than the quotes I received). In fact, if I were to go ahead I reckon I’d make a loss - definitely so if I had to replace the inverter which are usually only guaranteed for 5 years though should last 10 to 15.

Meanwhile the EST, no doubt acting on behalf of the govt, have tried to say that people who install solar for the 21p rate will get a 4% return!!!! I wonder what calculator they used for that because it certainly wasn’t their own. If you’re lucky you might get 1 to 2% and that would be without any maintenance or replacement costs. So, if you’re thinking about installing solar I would strongly advise that you don’t take the solar installer’s word for anything, nor the Energy Saving Trust’s, nor the government’s - check your maths thoroughly before you commit.