posted by Malachi Chadwick

Explainer:
what the government solar payment cuts mean for you

The government's announcement of drastic cuts to solar power payment scheme has left people reeling, but what do they actually mean?

What exactly is being cut, and why is it important?

In April 2010, the government introduced a scheme called the Feed-in tariff (sometimes shortened to Fit), which encourages people to install solar panels by offering panel owners a fixed payment for each unit of electricity they generate.

The scheme has been extremely successful, putting thousands of panels on Britain’s roofs and creating a thriving home-grown solar industry that now employs 25,000 people.

But after several months of rumours, leaks, false starts and general confusion, the government yesterday announced plans to slash these payments by up to 50%, with the cuts taking effect much sooner than most people expected.

What's happening now?

Proposed new levels for Feed-in tariff payments

Householders and small businesses currently receive 43p for each kilowatt hour their panels generate. Under the new proposals, this will be reduced to 21p for any solar rig installed after 12 December. Full details of the new tariffs can be found on the department for energy and climate change website.

The government is now 'consulting' on the new payment levels. Technically this means that the final numbers could differ from what was announced today, but the way the government has played the announcement so far suggests that it's quite unlikely to change its mind.

What does this mean for my solar roof?

If you already have solar panels installed, there’s no need to worry – your Feed-in tariff payments are still guaranteed (and inflation-linked) for 25 years from the date you had them installed.

If you’ve been planning to get solar panels, it all depends on how quickly you can have them installed. If they’re up and running by 12 December, you’ll be just in time to get the current, higher rates. Anything installed after that will start off at the same level, before moving to the new, lower tariff on 1 April 2012. What exactly these will be depends on whether the consultation persuades the government to change its mind.

If the new rates do end up being adopted, it's likely to be the end of 'free' solar schemes, where companies offer panels at low or no cost, in exchange for the Feed-in tariff payments. Killing off these schemes will effectively put solar power out of reach for poorer families, who could never afford to buy the panels outright at current prices.

This article examines the potential impact on homeowners in more detail, and is well worth a read if you're wondering whether home solar is still the way to go.

What does this mean for 10:10's Solar Schools project?

Our Solar Schools project, currently being trialled in eight schools in Reading, Norwich, Cambridge and the Scilly Isles, helps schools get their own solar roofs by raising money from the local community.

While today’s announcement reduces the total amount schools can earn from their panels, the programme is much less hard-hit than others. Because Solar Schools buy their panels outright using money they’ve raised through the scheme, they don’t need the Feed-in tariff income to pay anyone back.

The panels still easily pay for themselves over their lifetime, but Solar Schools always been about more than the financial incentives. The other benefits – protection from rising energy costs, educational opportunities, community links and carbon savings – aren’t going away, and that’s why we’re confident that the scheme still works.

In fact, Solar Schools is exactly the kind of project that we need to continue to keep community renewables going. If it can prove itself as a working model, it provides a new way for other schools and community groups to benefit from micro-generation when Fit-dependent private finance becomes less of an option.

What is 10:10's position on the cuts?

We're worried that these cuts – which could have been avoided with a bit of forethought – will hurt poor families and community groups, cripple one of the UK's few growing industries, and hold back our effort to move away from climate-changing fossil fuels.

Our take on the cuts is laid out in more detail in my new blog – Solar cuts: a matter of choice.