Government slashes FITs rate to 21p per kWh

The government has unveiled plans to slash the feed-in tariff for small solar power generators by over half.

Greg Barker announced plans to reduce the feed-in tariff for generators under 4kW capacity, which includes most domestic installations, will be 21p per kWh from April next year, down from its current 43.3p per kWh rate. Installations made after 12 December would be able to claim the current tariff only until April.

Barker said: “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust.

He blamed the need to cut the tariff on unexpectedly high levels of demand, which would see the bill for the feed-in tariff rise to £980m a year by 2014-15 if it was left at its current rate. He said his new rate would cut the bill to £250-280m in 2014-15.

Larger generators will also have their feed-in tariff cut.

Speculation about how high the feed-in tariff should be set has been rife for weeks.

Last week, energy minister Greg Barker confirmed the tariff would be cut. He said: “The subsidised returns we have seen on solar panel investments - funded from consumer energy bills - are unsustainable at a time when National Savings have pulled their index linked bonds, interest on savings accounts has plummeted and the stock market has dropped.”

The Financial Times reported that ministers were going to slash the rate to 21p Per kWh.

Solar panel fitters have warned that any cut below 28p would be devastating to the industry. They said it would see consumer demand would collapse because the pay back from having the panels installed would be too marginal to incentivise people to install them.