Solar tariffs below 28p will devastate PV industry

The government-subsidised feed-in-tariff for solar power must not go below 28p/kWh to avoid killing consumer demand and leaving the burgeoning sector in ruins, providers have warned.

The feed-in-tariff (FIT) dictates the amount paid to home owners with solar panels for each kWh of electricity they generate and feed back into the National Grid.

energy minister Greg Barker told the Solar Power UK conference in Birmingham that the tariffs will definitely see a cut to help balance the UK’s finances.

The government is due to announce its plans for the FIT level on Monday at 10am but the Financial Times reported this morning that the government plans to slash the rate to 20p kWh.

Daniel Green, chief executive of solar panel installers HomeSun, said: “We need a FIT at a minimum of 28p for the next financial year at least, or it will be devastating. Since the introduction of FITs, 25,000 jobs have been created and over 3,000 enterprises started.

“In the residential sector, providers of free solar panels are around 50% of the solar installations and they will disappear at anything less than 28p. This means the less well-off will not be able to benefit from solar,” he said.

Green added that anything below the 28p rate would also disincentivise people who pay to have solar panels installed because they would not breaking even for 10-12 years and the median time people spend in their homes is eight years.

However, Chris Hopkins managing director of roofers and solar panel specialists Ploughcroft Group and member of the government’s Green Construction Board, said some level of cut in the FIT was tolerable.  “A cut to 27 or 28p per kWh would not be a massive blow. I would say the companies that are working on tight margins will probably cease to exist but the good quality companies which understand renewable energy will be OK. For every pence below that level it has a more dramatic effect,” he said.

Hopkins said that a rate of 29p would provide home owners investing in solar panels with a similar return to that on offer in April 2010 when the FITs were introduced.

He said anything below 27p would see companies slashing jobs as consumer demand would collapse.