Clean Energy Installations’ Steve Munday discusses the Feed-in Tariff

When the government announced a consultation to review solar panel tariffs this got reported as “Tariffs to drop to 1.9p” and “Tariffs to be cut by 87%”. “The UK solar industry will collapse as a result of the cuts” they say. Now, lets try to look at some facts rather than media hype.

If we cast our minds back to 2010, a 4kW domestic installation could cost £16,000 to £18,000, actual panel prices were between £1.80 and £2.10 per watt, and the FIT was 43p. The government objective was that people with a decent south facing roof would earn about 8% rate of return while other less favourable  orientations might be down at 5%-6%. With savings rates as low as 2% the government thought this would attract householders to invest. What we actually saw was a rapid drop in installations costs to between £10,000 and £12,000 yielding financial returns as high as 25% leading to what seemed draconian, but was actually perfectly reasonable, reduction in FITS to 26p. Investors were still achieving returns of around 15%, way above the government’s objective for a ‘reasonable’ incentive. Today, panels are nearer 40p per watt, complete installations nearer £6,000, FITs of 12.8p and investors still getting returns of 10% - 18% depending on orientation; notably still way above government objectives.

So, what is so bad about the possibility of FITs dropping to 2p or even zero. We have always known that, as electricity prices rise and installation costs fall, the case for investing your savings in solar PV eventually stands up without the need for any subsidy: it will be worth it just for the reduction in electricity bills. But there is one more devil in the detail that nobody seems to be reporting yet.

The industry is currently highly regulated through the MCS accreditation process. This is good for the industry, good for consumers and good for safety. It also gives the network operators a degree of transparency and ability to monitor what is going on. Yes, you will get ‘cowboys’ and unregulated installations going on but not to any great extent as the householders cannot get their FITs without the proper paperwork. Now, what happens if you take away the FIT altogether? Every cowboy installer and even DIY enthusiast will be putting in solar PV installations without any regulation or control. Those with existing ‘legal’ installations may be tempted to extend their installations to reduce their electricity bills even further. The industry loses control and the grid will incur huge costs and outages due to the problems caused by unregulated and unmonitored over generation. Ultimately, we need to retain a token FIT just to ensure that the regulatory process is sustainable. Without it, regulation, safety and ultimately the security of grid supply are at risk.

Editor’s notes

Clean Energy Installations - backgrounder

Clean Energy Installations is an independent supplier and installer of heat pumps and solar photovoltaic (PV) panels. Working across the Midlands and the southern counties, it provides energy efficient services to homes, businesses, agricultural premises, schools and churches.

Clean Energy Installations works with customers throughout every stage of every project - from feasibility studies and design to installation and post project support.

Heat pumps provided by Clean Energy Installations can supply homes with all the heating and hot water they need. Completely replacing boilers, they can reduce heating and hot water bills by up to 50 per cent.

Clean Energy Installations offer two types of heat pumps - ground source and air source.

A ground source heat pump transforms land into an underground heat collector. Pipework buried just one meter underground absorbs thermal energy and transfers it into the home, meeting all its heating and hot water needs. With the air source option, a heat pump is placed outside the home. Here it harnesses heat from the outside air, whatever the temperature.

PV systems installed by Clean Energy Installations are bespoke to every client. They maximise efficiency and return on investment. Solar panel installation can be either on-roof, in-roof, or ground-mounted. Designs range from a 1.5 kWp system to power a family home to a 50 kWp system or more for commercial clients.

Clean Energy Installations recognises that construction and specialist contractor industries contribute to the environmental footprint of development projects. With this in mind, it mitigates the impact of its work through the three-Rs – reduce, reuse and recycle. 

The team at Clean Energy Installations comprises experienced and fully trained electricians, installers, roofers and project managers. They have a reputation for being friendly, flexible and trustworthy industry experts. Clean Energy Installations has close links with manufacturers and suppliers and provides regular training for its staff. This keeps the business at the forefront of advances in the solar industry and certified to install all types of systems to wide variety of clients. 

Clean Energy Installations’ accreditations include:

• Microgeneration Certification Scheme (MCS) – the company iscommitted to meeting the rigorous and tested standards set by MCS for the installation of solar equipment to the highest quality every time

• National Inspection Council for Electrical Installation Contracting (NICEIC) - Clean Energy Installations assures clients that all electrical work is of the highest standard required of a NICEIC Approved Contractor

• Renewable Energy Consumer Code (RECC) - Clean Energy Installations guarantees a high quality experience for customers buying solar panels for their home, community building or for a business, working to the stringent regulated standards of RECC

Clean Energy Installations was founded in 1997 as a consultancy to the rail and health sector. In 2010, it refocused its activities on solar developments and sustainable energy technologies for buildings.