The Government’s announcement on feed-in-tariff (FITs) levels from 1 April is to be welcomed. The highest tariff of 41.3p per kWh for electricity generated from PV of under 4KW on a retrofitted home - with an additional minimum of 3p per kWh for electricity exported to the national grid - is better than anticipated. But it is long overdue.
We at whatgreenhome.com have been campaigning since 2007 for the introduction of feed-in-tariffs. They demonstrably work. In Germany, where FITs were introduced in 1999, around 12% of it electricity is generated from domestic microgen; the UK, in comparison, generates less than 1%.
The independent Government agency (isn’t that an oxymoron?) the Energy Saving Trust posits that 800,000 households in the UK could benefit from FITs. It doesn’t elucidate over what time period. As things stand it seems to us it’s unlikely that more than a few thousand determined folk will look to set up domestic microgen schemes.
Why? The cost remains prohibitive and the payback period too long. Government department DECC states the electricity consumption of an average three-bed home in the UK is 3,300 kWh per year. A 2.5kWp solar electric system is expected to generate 2,125 kWh per year.
The average cost of a 2.5kWp solar PV installation currently stands at around £12,500. The payback period based on the above figures is estimated at ten years, equivalent to a return of 9% and income and savings of £25,000 over a 25-year period. Ten years is to far in the future for most people.
True until April 2010, Government grants of up to £2,500 are available through the Low Carbon Building Programme, which improves payback and return further. But, in our opinion, the real driver for mass uptake is further incentives. The Tories have said they will give every household £6,500 to green their home - should they win the election.
The incumbents have introduced a pilot scheme called Pay As You Save (PAYS). The scheme, which is being trialled in five areas nationwide, will give households the opportunity to invest in energy efficiency (such as solid wall insulation) and microgeneration technologies (such as solar panels) in their homes with no upfront cost.
Householders will make repayments spread over a long enough period so that repayments are lower than their predicted energy bill savings, meaning financial and carbon savings are made from day one. The pilot scheme will run until April 2011, after which and if deemed a success it will be rolled out across the country. It can’t come soon enough.
