Will changes to UK solar panel laws make you £8,000 worse off?

Clive Rolison
Tuesday, 22nd September 2015

Clive Rolison from Complete Renewables in Essex explains how changes to subsidy laws will affect solar panel owners.

Anyone who is interested in permaculture or alternative energy has probably considered using solar panels to provide their home with electricity which doesn’t come from the national grid or create greenhouse gases. The costs of installing a PV (photovoltaic) system has dropped dramatically in recent years as parts become cheaper and the technology has improved, so that now getting a typical solar panel system for £6,000 isn’t uncommon. For those that are savvy enough to construct their own, the costs can be even lower.

But £6,000 is still a lot of money, even when the savings to your electricity bill are factored in. To compensate for this cost and to move the UK closer to its legally binding CO2 emissions targets, the government created a subsidy called the Feed-In Tariff (FIT). The FIT meant that homeowners who created clean electricity would be paid for each unit that they generated. Up until this, these payments were worth £8,750 over a solar panels 25 year lifespan, and experts say that the FIT is one of the main reasons that Britain has installed 700,000 solar panels since the scheme began.

If that payment seems excessive, it’s important to remember a couple of things. Firstly, solar panels represent a new technology with massive potential for growth. Just earlier this week, students from Stanford were able to improve solar panel efficiency yet again by using a cooling silica material in their designs. But unless new technologies are nurtured and receive some level of government support, they will never be able to compete with the existing players that already have enormous economies of scale in action and near unlimited resources at their disposal.

The second reason is that the existing players - we’re talking about the big energy companies here - are already hugely subsidised to a level that completely dwarfs government support for solar panels. These aren’t always direct subsidies, sometimes they come in the form of tax cuts and sometimes they come when taxpayers are asked to foot the clean up bill after fossil fuel companies have caused damages. The IMF, a well-respected financial institution, found earlier this year that the governments of the world collectively spend more on fossil fuel companies than they do on healthcare.

Put in context then, a subsidy to protect solar panels and help us move toward a sustainable future seem like a much more reasonable idea. It has been found by multiple scientific reviews that the cost of moving to renewable energy is much lower than the costs of cleaning up after oil companies, and would save 1.6 million lives from fatal pollution-caused illnesses.

But earlier this month, the UK government took the unexpected decision of reducing subsidies for solar panel owners, the FIT, by 90%. This means that anyone who installs solar panels after the January 2016 deadline will be £7,850 worse off than someone who manages to install solar panels before that deadline. One piece of good news is that those who already have solar panels will not be affected by the change, as the initial subsidy agreement was a 20 - 25 year guarantee, but for those who were planning to have solar panels installed in 2016, and for anyone who cares about the environment, this news is a massive blow.

What should you do if you were planning on getting solar panels installed? The best course of action is to move quickly to see if you can get solar panels installed before January and still qualify for the current FIT payments. But this is not an option for many people, either because they don’t have the financial capacity right now, or because their local solar panel installers are fully booked. For those people, solar panels are unfortunately a less attractive financial option than they once were. The true cost of the government’s decision though, will not be shouldered by people, but by the planet.

About the author

Clive Rolison founded Complete Renewables to help homeowners and businesses to cut costs and prevent climate change by installing renewable energy technologies. They specialise in PV solar panels, but also install air source heat pumps, ground source heat pumps and more, particularly in the UK. Clive uses his many years of experience in the energy industry to write extensively on the issues facing the renewable energy sector, and his articles have been featured in theGreen Tech Gazette as well as the Green Tourism Magazine and in his own renewable energy blog.

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