Will Solar PV Make sense after the big subsidy cut?

With the announcement in August by DECC of significant (~87%) Feed In Tariff (FIT) subsidy cuts to domestic solar installations, the solar industry understandably threw its arms in the air and over 10,000 complaints were submitted in response to the proposal.

We wrote this blog “Is the UK Solar PV Industry now broken?”, individuals in the renewable energy sector slumped in their seats, got angry and generally wished there was a government in power that could look beyond the end of their noses as far as a long term renewable energy strategy in the UK.

Whilst the final tariff reduction is still to be announced and likely cuts will have to be delayed in order to process the complaints posted the passage of time has allowed companies and individuals to review how appealing solar PV will be after the event.

On a guest blog I wrote last month a reader in response to my article on energy saving, piped up with a comment to the effect of:

“There will be no point in installing solar pv next year if there is no subsidy, so why bother?”.

So I merrily got my calculator out and decided to see what the numbers said. I even surprised myself…

A south facing roof with 4kWp (16 panels) installed in Guildford on a 30 degree pitched roof. Installed price (including VAT): £7,000

FIT = 1.9p/kWh, Assumed export tariff = 4.85p/kWh, Irradiance = 1014kWh/kWp = 4056kWh total, cost of buying electricity = 13p/kWh

FIT income: £77.06

Assumed export income: £98.36

Electricity saving: £527.28

Total benefit: £702.70

This equates to a first year return of 10% or 8.5% of you conservatively assuming 80% usage due to losses during summer months. It is less than returns you can get today, sure but nonetheless these kinds of figures fill me with much hope and suggests twinned with battery storage and immersion diverter equipment the future for the UK solar market from a consumer’s point of view is still very bright indeed.

Indeed projects and homes that can fully use the electricity solar panels produce will benefit most and will no doubt drive further product advancements. But that’s another blog!

Whilst many tried hard to derail the solar PV freight train the hard facts suggest this latest obstacle is merely a bump in the track and I hope that this positive message is spread wide and fast to consumers that need energy security the most.

Doug Johnson

Doug is a chartered mechanical engineer and has had the pleasure of being involved in the UK renewable sector since 2008. With wide-ranging operational and design experience in both the domestic and commercial sectors across a wide range of recognised technologies he hopes to be able to share his experience to help enlighten and save you hassle along the way.