Solar panel payments slashed

Solar panel returns will be slashed again from August, with a cut to payments, their lifespan reduced by five years and plans to regularly cut back on subsidies revealed.

The major part of the Feed-in Tariff solar panel subsidies will be cut by almost a quarter, for new installations, the Government confirmed. Meanwhile, the period that they are paid over will fall from 25 to 20 years.

The move to cut solar subsidies under the Feed-in Tariffs scheme means homeowners hoping to take advantage of current generous rates must act swiftly - but they have been given an extra month to join.

In an announcement today, the Department of Energy and Climate Change (DECC) said changes to the Feed-in Tariffs solar subsidies scheme would arrive for all new installations after 1 August - a month after the planned 1 July date.

The amount homeowners are paid for generating energy on an average-sized installation will fall from 21p to 16p per kilowatt hour (Kwh).

However, the tax-free element and valuable Retail Prices Index inflation-linking of returns will stay and homeowners will see what they are paid for the small amount of energy they export back to the grid rise from 3.2p to 4.5p per Kwh.

Rolling cuts to returns will also be brought in, with average reductions of 3.5 per cent every three months. This will be based on take up of panels and if it is high returns could fall faster, while if it is low cuts could be delayed.

The DECC claimed that the new tariffs would give a tax-free, inflation-linked return on investment of more than six per cent for most typical, well sited solar panels.

This a is a far cry, however, from the 10 per cent-plus returns some homeowners with panels installed are currently getting.

Tax-free returns of more than 10 per cent a year

The Government took the axe to the Feed-in Tariff in late 2011 – hacking the amount that householders get paid for generating electricity from 43.3p per unit down to 21p – dramatically reducing the potential rewards.

This triggered a big decline in the take-up of panels, but the solar industry says that a rapid fall in the cost of installations has now bumped up overall returns again.

Tax-free returns nearing 10 per cent a year from solar panel subsidies can be achieved again, they say. And even supermarket giant Tesco has got in on the act - offering 20 per cent of its panels this summer.

When This is Money crunched the numbers on Tesco's £6,799 3.92KWp system, using official figures from the Energy Saving Trust, we found that this could deliver homeowners with optimally placed roofs potential returns starting at 12.5 per cent a year.

In a piece of good news for those considering panels, the Government extended the deadline for new installations to keep the old 21p tariff by one month - previously cuts had been scheduled for 1 July.

Those interested must act swiftly, however, as installation lead times of a month to six weeks mean that they may need to book solar panels by mid-June.

The Government claimed that by laying out its future plans for solar panels and the rolling three-month cuts, it would bring 'certainty' to the industry and installations prospects.

Energy and Climate Change Minister Greg Barker said: '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.

'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.'

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UK government to review Green Deal

Downing Street is about to review the government's Green Deal after warnings that it's liable to fail.

The Cabinet Office has been interviewing critics of the flagship scheme and is expected to report soon.

The Deal - to insulate the UK's aged housing stock - is designed to save carbon emissions, keep people warm, and make energy affordable.

But critics say it won't give enough help to the fuel poor, and warn it may waste £2-3bn of people's energy bills.

They say this is a scandal after the recent warning that the number of people unable to afford their energy bills is likely to rise to 8.5 million.

The Green Deal is split into two parts. The larger part relies on householders voluntarily taking pay-as-you-save loans to cut energy bills through home insulation. The private sector is supposed to deliver the improvements.

The other part of the programme, known as ECO, will subsidise people to insulate their homes if they can't do it without help. This will be funded through a £1.3bn-a-year charge against all of our energy bills.


But there is a dispute over the priorities.
'Widespread' complaints

The government says most lofts and cavity walls are already insulated under previous schemes so it wants to offer grants on much more expensive solid wall insulation.

Solid walls will ultimately have to be made warmer if the UK housing stock meets expectations for reducing carbon emissions. But it is thought that at first this expensive and disruptive option will be mostly taken up by affluent households.

It is crazy if the Green Deal fails to ensure that all the homes in the country at least have adequate loft insulation”

Critics say it makes no sense to insulate solid walls at approximately £7,500 a home when you can insulate lofts of the "fuel poor" for £500 a home.

They also argue that the ECO subsidies scheme will force low-income families to pay extra on their fuel bills to subsidise solid wall insulation for more wealthy homes.

Complaints have been so widespread that a Cabinet Office team was detailed to interview the critics, who estimate that by pushing money towards solid walls rather than lofts the government could waste between £2bn and £3bn of energy bill payers' money in coming years.

"It is crazy if the Green Deal fails to ensure that all the homes in the country at least have adequate loft insulation," said Andrew Warren of the Association for Conservation of Energy, an industry lobby group.

"Loft insulation and cavity wall insulation are the basic first steps in terms of effectiveness. Treating solid walls is a very much more expensive option that'll have to be paid for by the energy consumers whose bills will be funding the Green Deal.

"The number of people in fuel poverty is rising. If you get the policy right you can tackle fuel poverty by getting everyone's lofts and cavity walls insulated."

This was a common criticism when the government opened the Green Deal to consultation at Christmas, and ministers have shifted ground since.
Stopping short?

In April, the Deputy Prime Minister Nick Clegg promised that of the £1.3bn ECO subsidies, at least £540m should save energy in the worst-off homes. He said: "Each year this money will help 180,000 of the poorest households make their homes cheaper to heat for good."

But this doesn't go far enough for the critics, who are baffled by the Department of Energy and Climate Change's (Decc) assertion that it is time to focus on solid walls because almost all lofts and cavity walls are already done.

A recent Decc document shows that only 60% of homes (14.1 million out of 23.3 million) currently have an adequate insulation blanket of at least 125mm.


The pay-as-you-save side of the Green Deal is also wobbling because few people in the energy sector believe it will deliver the savings in energy and carbon needed for UK climate change targets. Buildings are responsible for more than 40% of UK emissions.

The Cabinet Office team has been told that the Chancellor should nudge people into the Green Deal by changing Stamp Duty to reward householders who have insulated their homes, or punish those who haven't.



Golden rule

A Green Alliance report compared the Green Deal with the recent digital TV switchover and concluded: "There is a huge risk that the government's current plans for communications won't deliver the levels of take-up needed to make sure the Green Deal (is) a success." The author, Faye Scott, says the scheme needs strong, trusted national branding.


The government insists that insulation schemes offered under the Green Deal should follow the so-called Golden Rule that the improvements must be paid back during the agreed loan period.

A trial in Sutton in South East London suggested that bills were reduced by between £170 and £270 a year. Press reports said that under that trial, 25% of improvements did not meet the Golden Rule.


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Is it cheaper to put the heating on high for a short time or longer at a lower temperature?

A house will heat up from cold more quickly the hotter the radiators are.

On the face of it, therefore, operating a boiler at maximum means a warm home, quicker.

However, the efficiency of a central heating system – and this is particularly true for modern condensing boilers – depends a very great deal on the correct matching of boiler power output to the size and number of radiators.

So, key to keeping your home warm with the central heating system at minimum cost, is having the correct boiler installed in the first place, and then using the correct power output setting.

If you set your boiler output too high, then the temperature at which the water returns to the boiler after circulating through the radiator system will be too high for it to recover much heat from the boiler’s exhaust gases (the process that normally makes condensing boilers much more efficient).

Try operating the boiler with as low an output setting as is consistent with achieving the required warmth in your home in a reasonable time.

Do be aware, however, that operating at low boiler output temperatures will also mean that water in your domestic hot water tank will take longer to warm-up too – so a little trial-and-error will be required.

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US tops global clean energy investment rankings

The US has regained top spot from China as the biggest investor in clean energy in 2011, according to global rankings.

The table, published in a report by the Pew Charitable Trusts, showed that US invested more than $48bn (£30bn) in the sector, up from $34bn in 2010.

China slipped to second place, the authors reported, with investment only increasing by $0.5bn to $45.5bn.

Globally, overall financial backing in clean energy technologies hit a record $263bn, up 6.5% from 2010 levels.

The report, Who is Winning the Clean Energy Race, showed that G20 nations accounted for 95% of the investment in the sector (which does not include nuclear power).

The data, compiled by Bloomberg New Energy Finance, ranked the UK as seventh in the world, with $9.4bn of investment in 2011.

Over the course of the year, an additional 83.5 gigawatts (GW) was added to the world's clean energy generation capacity, including almost 30GW of solar and 43GW of wind.

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