Rush in solar installations ahead of subsidy cut

Author

Emily Gosden Energy Editor

November 5, 2015

‘Panic’ to qualify for subsidies could see some households get a poor deal, experts warn

Tens of thousands of households are scrambling to put solar panels on their roofs before lucrative subsidies are cut, official statistics suggest – amid warnings the “mad rush” could see some get their fingers burnt.

Ministers announced in late August that they planned to slash rooftop solar subsidies by almost 90 per cent from the new year, as they seek to rein in green energy costs.

Experts say the move will mean installing rooftop panels – which can currently make a £7,000 profit over 20 years – will no longer be viable for most households.

“What you are seeing is the panic of a closing down sale. But the last technology the UK Government should be pulling the rug on is solar power.”
Leonie Greene, of the Solar Trade Association

Solar panel installations under the “Feed-in-Tariff” (FiT) subsidy scheme hit a three-year high of 18,346 in September, up 59 per cent on August, statistics from the Department of Energy and Climate Change (DECC) show.

Most of the installations are believed to be domestic rooftop panels – although the FiT scheme is also used to subsidise commercial rooftop projects and small solar farms.

The surge in installations is expected to continue through to December, with the Solar Trade Association reporting its members seeing “a very significant rise in demand”. Rooftop panels can be installed in as little as half a day.

But Virginia Graham, chief executive of the Renewable Energy Consumer Code, the industry code of conduct body, warned that the “panic” to qualify for the payments risked households signing up for deals with hidden catches, or falling foul of traders carrying out shoddy or overpriced work.

She said a “mad rush” for subsidies when they were last slashed, in 2011-12, resulted in “a very high number of complaints because people got their fingers burnt”.

She said some households had failed to carry out proper checks before signing up.

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“They had paid over the odds; in some cases they didn’t even have an installation – they paid the deposit and [the company] couldn’t get the installations completed in time; other times the installations can be substandard because people are just rushing to get it all done,” she said.

Under the FiT scheme, households that install panels are paid ‘generation tariffs’ for the electricity they are estimated to use and ‘export tariffs’ for the surplus electricity they are estimated to sell the grid. They can also expect to save on their energy bills by avoiding buying electricity.

A typical solar system costs about £6,250, according to The Eco Experts, a solar price comparison website. Currently, a household’s combined subsidy earnings and savings could come to £673 a year, meaning they recoup the cost of the panels in just under 10 years and could make a £7,210 profit after 20 years – the duration of the subsidies.

But if the generation tariff is slashed by 87 per cent, as proposed, combined earnings and savings would fall to £266 a year, meaning even after 20 years a household would not have recouped the installation cost. It would take a further seven years of bill savings to make a return on the investment, The Eco Experts estimates.

Some solar companies offer households “free” panels – in which the company pays the installation cost and takes the subsidy payments, leaving the household to benefit only from the energy bill savings.

Ms Graham warned such deals often required people to sign a restrictive lease agreement giving the company various rights over their property. “We have had complaints from people who have difficulty selling their house,” she said.

Leonie Greene, of the Solar Trade Association, warned that people could also encounter problems if they signed up with firms that then went bust following the cuts.

The industry has claimed there could be 20,000 job losses, and several firms have already gone into administration.

Ms Greene said: “It is important that anyone wanting to invest in solar takes necessary care to ensure a quality installation. Solar is an exceptionally reliable investment, but it is vital that Government acts quickly to secure the future of this industry, not least to ensure the necessary future care consumers expect from their local solar company.”

She added: “It is entirely predictable that if the Government pursues sudden and extreme policy changes they will spark mighty booms followed by mighty busts. At best this is a very inefficient way to run an energy policy.

“What you are seeing is the panic of a closing down sale. But the last technology the UK Government should be pulling the rug on is solar power.”

A DECC spokesman said: “Our priority is to keep bills as low as possible for hardworking families and businesses, while reducing our emissions in the most cost-effective way.

“Government has engaged extensively with industry and the public via the Feed-in Tariff consultation. We are working closely with industry to ensure installations are made with the highest of standards.

This article was written by Emily Gosden Energy Editor from The Daily Telegraph and was legally licensed through the NewsCred publisher network.

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