The 1st April 2019 signifies the end of the feed-in tariff
But what does the government mean by this and what are the implications for customers interested in solar?
What is the feed-in tariff?
The feed-in tariff (FIT) is a policy that was designed to accelerate the uptake of small-scale renewable energy generation technologies. It’s worth up to £6,000 tax-free* for residential solar PV system installations over 20 years. This does not include the additional savings made on your electricity bills.
The FIT is made up of two payment tariffs: generation tariff and the export tariff.
The generation tariff provides a fixed income for every unit your solar generates – currently at 3.86p/kWh it is a fraction of the 46p/kWh it was in April 2010.
The export tariff provides you with an additional fixed income for every unit of electricity you sell back to the grid – deemed at 50% of generation – currently at 5.25p/kWh
The FIT was always designed to get smaller and smaller as the cost of the technology drops. From 2010 to 2017 the price of having 4kW of solar installed in the UK fell by 67%, according to Green Business Watch, compared to average annual electricity bills which have risen by 31% in the same period (Gov.uk, 2018).
What’s happening on 1st April 2019
The generation tariff will discontinue and there will no longer be a payment for generating solar energy. This is not a bad April fool’s joke. The fate of the export tariff is less clear, set to also be discontinued, strong arguments faced by the government have forced a U-turn. After all, it doesn’t seem right for the grid to benefit from free electricity that has been provided by small-scale residential solar systems. On 8th January, the government revealed a proposal for a replacement mechanism for the export tariff. Households with solar panels are to get guaranteed payment for excess electricity. However, there will be a period when people are unable to benefit from being paid for export as no clear dates have been released as to when the mechanism will go live.
What does this mean to the consumer?
Is your family in all day and using electricity in the daytime?
If you have decent roof space and there is somebody in the home during the daytime, then it is worth considering solar before 1st April 2019 to take advantage of the generation tariff. A big roof will be able to generate more energy meaning more income via the generation tariff. If your house is occupied during the day, it is unlikely you will have excess energy to export electricity or store it in a battery. In this scenario, maximising the system size will shorten the payback period. To take advantage of the FIT we recommend acting fast as the installation will get busy as we approach 1st April. It will take up to two months from order to installation and commissioning. Solar PV systems installed and registered by the MCS (Microgeneration Certification Scheme) before the end of March 2019 will qualify for the tariff.
Is your family out all day and using electricity at night?
In a post-FIT world, self-consumption is the objective. If you have an average sized roof and your home is empty during part of/most of the day, then you should consider solar together with battery storage. Battery storage will enable you to use the electricity created by your solar system during times when the sun is not shining. This will mean you are less reliant on non-renewable electricity provided by the grid. You will be even more energy independent and more sustainable.
Although 1st April spells the end of the generation tariff it’s not all doom and gloom. If you want to make a bit of extra income via fixed tariffs we suggest acting quickly as the market will get busy before the tariff ends. Alternatively, FIT might not make any difference to your situation at all – particularly as solar prices continue to drop and electricity prices continue to rise. Find out how much you can save with solar today and join over 800,000 UK households that are already enjoying all the benefits of solar PV and battery storage.
*4kWp solar PV system, 900kWh per kWp/annum, 3% annual tariff inflation (linked to RPI)
