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Solar FIT subsidies to be cut

25 May 12 The government is cutting the subsidies that it pays towards the installation of solar panels in a bid to put the feed-in tariffs (FITs) scheme on a more predictable and sustainable footing.

The Department of Energy & Climate Change (DECC) is introducing a range of changes to the FITs subsidy scheme with effect from 1 August. The tariff for a small domestic solar installation will be 16p per kilowatt hour, down from 21p, and will be set to decrease on a three month basis thereafter, with pauses if the market slows down.  All tariffs will continue to be index-linked in line with the Retail Price Index (RPI) and the export tariff will be increased from 3.2p to 4.5p.

The new tariffs are expected to give a return on investment (ROI) of more than 6% for most typical, well-sited installations, and up to 8% for the larger bands, DECC said.

Energy minister Greg Barker said: “Today starts a new and exciting chapter for the solar industry. The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing today provide a strong, sustainable foundation for growth for the solar sector.

“We can now look with confidence to a future for solar which will see it go from a small cottage industry, anticipated under the previous scheme, to playing a significant part in Britain's clean energy economy.

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“I want to send a very clear message today. UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence.”

Alan Aldridge, chairman of the Solar Trade Association said: “We broadly welcome many of the government’s decisions for how solar PV will be treated in the FITs scheme and wholeheartedly welcome the inclusion of Solar in DECC's updated Renewables Roadmap; this should reassure consumers and solar companies alike that the Government recognises and stands behind a major role for the solar industry.

“Despite the currently slow market, the industry can have some confidence that the new Tariffs are tight but workable. Householders should be reassured the new Tariffs will provide more attractive returns than can be found elsewhere today. The STA is now keen to work with government to get this positive message out."

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