The Government lose their Feed-In Tariff (FIT) appeal in Supreme Court

As I previously predicted; the Supreme Court has over-ruled the Government’s appeal over the higher Feed-In Tariff rate to consumers installing solar photovoltaic panels for the period between December 2011 and March 2012.

On the 23rd March 2012, the Supreme Court backed the High Court’s decision to reject the Government’s appeal to cut the Feed-In Tariff rate before March 2012.

This decision has come after a series of delays from the Government but it finally confirms that solar photovoltaic (PV) installations completed between 12th December 2011 and 4th March 2012 will receive the full 43.3p/kWh rate, not the 21p/kWh rate as proposed by the Government. This will be a relief to the many PV solar customers who ignored government threats of a potentially lower feed in tariff rate and proceeded to have PV solar installed between December 13th 2011 and March 3rd 2012.

A summary of industry reactions can be viewed here.

David Cameron must be a very worried man as his credibility is now hanging by a thread. First Chris Huhne resigns in disgrace, then Greg Barker admits that the data used to justify the cut in solar feed in tariff rates was flawed and now this, the final rebuttal from the law courts.

Just when Cameron thought thinks couldn’t possibly get any worse, along comes Peter Cruddas to confirm on camera what many have suspected all along. The subsequent announcement of his immediate resignation may have been swift, but the repurcussions of this “press sting” will drag on for a very long time.

It does make you wonder, just who IS driving the government’s energy policy?

Jim Gillespie
National Sales Director
www.1st4solar.co.uk

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Comprehensive Review Phase 1: Consultation on Feed-in Tariffs for solar PV

The government’s response to phase 1 of the consultation on solar PV feed-in tariff rates was published on Thursday the 9th of February. This prompted an urgent question in the House of Commons by Caroline Flint, Energy Secretary for Labour. You can view the exchange in full by clicking this link

Below is a quick summary of the main bullet points:


The feed-in tariff rates

The 21p rate of feed-in tariff has been confirmed for solar panel installations of up to and including 4kW with an eligibility date on or after 3 March 2012. The rate will start from 1 April 2012. See here for tariffs for other size installations.

Energy efficiency criteria

The Department of Energy and Climate Change (DECC) confirmed that it will make energy efficiency criteria a condition of receiving the full rate of feed-in tariff.

It has backed down on its original proposal that applicants must have an energy performance certificate of level C to qualify. This would have ruled out 90% of houses.

From 1 April any building to which a solar PV installation is attached or wired must have an EPC of level D. According to DECC, just under half of all houses currently meet this category (over 70% of housing association and local authority dwellings). Generators who can’t demonstrate that they meet the standard will get just 9p per kWh generation tariff.

Multi-installation rate

As suggested with the consultation papers, DECC has also brought in a new lower rate for multi-installations. These will apply to individuals or companies which receive the feed-in tariff payments from 25 or more other solar PV installations (regardless of their eligibility date).

Alongside the response to the consultation on the comprehensive review of tariffs for solar PV phase 1 (which was launched in October last year), DECC has also published two more consultations: one on solar PV cost control, and the other on tariffs for non-solar PV technologies. Details of these will follow shortly.

To view the DECC statement in full click here

Our reaction to this announcement

We remain highly critical of DECC for the knee jerk and “botched” delivery of the reductions in the feed in tariff. In our opinion, they have used a sledgehammer to crack a nut.

Despite overwhelming evidence to the contrary, Greg Barker continues to claim that they had to act swiftly as the take up of PV solar by the public was too great. That is simply untrue. What has spoiled the UK solar market are two specific niche markets; namely “Solar Farms” & “rent a roof” schemes.

Had DECC and it’s ministers wanted to, they could easily have brought out secondary legislation aimed specifically at these two areas; simply ring fencing them and putting sensible limits on the numbers being installed AND reducing the feed in tariffs for each one. That simple and effective action would have ensured that the system was not being abused and would allow the slow and steady increasing take up of PV solar by the “able to pay” domestic market plus the SME market, who in truth were just beginning to enter the marketplace. Growth and take up with the latter has been slow due to the economic recession.

We are convinced that if DECC had heeded our advice and acted as outlined above and gave notice back in November 2011 that the 4 kw and under feed in tariff would drop from 43.3p to 21p from April 2012, it would NOT have resulted in a “stampede” by either the public at large or industry. Instead, people would have been given a reasonable timescale to make an informed decision as to whether or not to install PV solar.

Sadly, DECC did not act in this logical and controlled manner. Instead they caused mass panic amongst both the solar industry and the electorate by announcing drastic feed in tariff cuts, right across the board, with only 6 weeks notice and in doing so left themselves wide open to a legal challenge for blatantly breaching their own consultation guidelines. DECC’s “knee jerk” actions have given cause for widespread condemnation by industry at large, local authorities, housing associations, the Church and many MP’s themselves. Furthermore, if they are silly enough to carry out their threat to appeal to the Supreme Court; even though 3 High Court Appeal judges told them they cannot do so; they stand to lose far more than they can possibly gain. If they were to lose in court for a third time, it would set a very dangerous precident for future challenges to government actions, not to mention destroy their credibility with both the electorate and industry. In addition, it will open the flood gates for solar companies such as ours to challenge the government for compensation as a result of their botched actions; which collectively would cost the government many millions of pounds if they were to lose that legal challenge as well.

With Chris Huhne resigning in disgrace and Ed Davey taking over, DECC had an ideal opportunity for the “new broom” to make a clean sweep. Sadly they have failed to take advantage of that opportunity. The “carrot” of investing in solar is very rapidly being replaced by the “stick” and many within industry feel the government are living up to their “nasty party” reputation; which does not bode well for the future of their flagship Green Deal plans.

Written by Jim Gillespie
National Sales & Marketing Director
www.1st4solar.co.uk

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The Court of Appeal has upheld a High Court ruling that Government cuts to the Feed-in Tariff were unlawful.

The three Lords Justices of Appeal announced their reserved judgement this morning following a hearing 10 days ago.

Today’s decision is a damaging blow to Ministers and officials at the Department of Energy and Climate Change, who must now introduce the contingency date of March 3 for the start of the 21p rate for solar PV and not the original December 12 deadline.

The court judgement also means customers who have had solar panels installed and are registered ahead of the new March 3 cut-off point will now receive the original 43p rate for 25 years.

Customers who register on or after March 3 will qualify for the current higher rate until April 1, when it will drop to 21p.

DECC was also ordered to pay the full costs of around £125,000 for the appeal hearing. In a Twitter message immediately after the ruling was handed down, Energy Minister Greg Barker, wrote: “Win, lose or draw today, important we move forward together, drive down costs + step up deployment.”

The original legal challenge was made by Solarcentury, Friends of the Earth and HomeSun, and the High Court ruled on 21 December that a Government proposal to cut payments for any solar scheme completed after 12 December 2011 – 11 days before an official consultation into the proposal had even closed – was unlawful.

The Government has been refused permission to appeal in the Supreme Court.

We strongly urge all prospective customers to place an order with us ASAP as to qualify for this higher rate the installation and associated paperwork must be in and completed before 3rd March 2012

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Wednesday the 25th of January is D Day for the UK Solar industry

Late last Friday afternoon, lawyers representing Friends of the Earth and the Solar Trade Association were told that a Court of Appeal decision on whether to allow the Government’s legal bid to overturn a ruling that its cuts to the Feed-in Tariff was unlawful is to be announced on Wednesday, January 25.

The ruling of the three appeal court judges will be delivered a week after the Department of Energy and Climate Change confirmed a contingency date of March 3 for the retrospective introduction of the revised 21p tariff rate should its appeal fail.

A ministerial Statement has also been issued by Secretary of State Chris Huhne. Should Huhne still be in his position tomorrow, he will be left with the awkward decision of whether to carry on the legal fight to the Supreme Court if the appeal judges turn down the bid. The Crown Prosecution Service is expecting to receive vital evidence today relating to allegations the Cabinet Minister ducked a driving ban by switching speeding penalty points to the licence of his estranged wife Vicky Pryce. A decision on whether to bring criminal charges of perverting the course of justice is expected very soon after.

Tomorrow the Court will rule on whether to grant the Department of Energy and Climate Change (DECC) a hearing for its appeal against the High Court’s December ruling on UK solar feed-in tariffs. The Court of Appeal is expected to deliver its verdict at 10:30am tomorrow.

Judges have been deliberating over the decision since January 13, having previously committed to delivering a verdict on or before February 9th. The ruling of the three appeal court judges tomorrow now leaves the industry with two possible outcomes:

DECC loses

DECC is not granted an appeal, or is granted an appeal and then loses. If this were to happen then the FiT rate for all <4kW systems installed on or after December 12 will return to 43.3p for the lifetime of the scheme. The lower feed in tariff rates laid before Parliament would then come into effect on March 3; which would be 21p.

If an appeal is granted and DECC subsequently loses its appeal, then it is entitled to challenge the ruling. If DECC is not granted leave to appeal, then it is unable to challenge the decision in the Supreme Court. A Supreme Court challenge would further prolong industry uncertainty over the entitlements are for FiT rate systems installed between December 12, 2011 and April 1, 2012.

DECC Wins

DECC is granted an appeal and subsequently successfully overturns Mr Justice Mitting’s decision that cuts to the FiT were “legally flawed”. If this were to happen, then feed-in tariffs will remain as they are set out in the consultation document published on October 31. That means that <4kW systems installed on or after December 12 will receive 43.3p until April 1, 2012, dropping to 21p for the remaining lifetime of the scheme.

What to do now?

If DECC loses tomorrow and the judges decision goes in favour of the solar industry, then the 43.3p tariff will immediately become available. This will undoubtedly result in a flood of activity and orders for companies such as ours. Last November, when DECC announced the tariff reduction, it resulted in a similar flurry of consumer demand and many were left disappointed as they could not get an installer to fit their solar systems on or before Dec 12th. In our case, we had to close our order book in less than a week as we were inundated with orders. To avoid that scenario happening again, we strongly recommend that you place an order immediately to avoid disappointment.

It is also worth noting at this point that even if the decision goes in DECC’s favour tomorrow and the 21 p tariff still stands, installing PV solar still makes sound financial sense. That is because prices today are 30% cheaper than they were in 2011 and therefore return of your initial investment is still possible in a time period of around 5 years. At the time of writing this article, we can supply, deliver and install a 4 kw PV solar system for around £8,500.

From 1st of April the government propose to make it more difficult to obtain feed in tariffs for solar in the first place, with an Energy Performance Certificate (EPC) having to be carried out on your home beforehand. If your home rating doesn’t reach a “C” band, you will not be eligible to receive feed in tariffs. This in turn could cost you several hundred pounds to upgrade the energy efficiency of your home and it is estimated that currently, as many as 7 out of 10 homes will fail to reach a “C” band rating on an EPC.

In short, regardless of the outcome of tomorrows ruling there are compelling financial reasons to install PV solar before March 3rd. This really is the last opportunity to do so before the criteria for eligibility change substantially.

Jim Gillespie
National Sales Director
1st 4 Solar

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Environmental Audit Committee to launch inquiry into Feed-in Tariff cut decision

A House of Commons’ committee is to launch an inquiry into the Government decision to halve the Feed-in Tariff for solar PV and the December cut-off for the current, higher rate.

The move follows Monday’s announcement by Energy Minister Greg Barker that the current 43.3p/kWh Feed-in Tariff will be replaced by a 21p rate for eligible installations from December 12.

MPs on the influential Environmental Audit Committee have voted to launch the investigation and will make a call for evidence tomorrow.

The decision to reduce the solar feed in tariff has caused an outcry with consumers and industry complaining that the 6-week window is too drastic and will do irreparable damage to the fledging market and damage consumer confidence in renewable energy; not to mention public trust of the government.
Now the 16 MPs sitting on the Environmental Audit Committee have drawn up the terms of reference for their solar FiT inquiry, which will be made public tomorrow.

Meanwhile, a number of solar industry professionals have come together to seek legal advice to ascertain if the Tories swift action to reduce the feed in tariff is in breach of Primary Legislation. If it is, this in turn could lead to a Judicial Review whereby the government may be held to account and have to justify their actions in a court of law.

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Will the proposed Tory “solar slash” alienate them with Middle England voters?

This government is guilty of “Punch & Judy” politics; quickly scrapping or altering initiatives started by the previous Labour government and completely ignoring the consequences on the electorate.

A previous example of this was Home Information Packs (HIPs). Admittedly, they may not have been ideal or popular, but they were working. They put off “less than genuine” sellers from entering the market and the number of abortive property transactions fell substantially as a result. Since the Tories bowed to pressure from their toffee nosed estate agency “chums” to scrap them, not only did it put 10,000 voters immediately onto the dole queue, the number of abortive property transactions has risen to an unacceptably high level again; thus indeed proving that the HIPs were working.

A “carrot and stick” approach was needed when it came to persuading the public to embrace renewable energy in this country and the last government at least understood that. This is why the first two years of the solar feed in tariff was generous to overcome people’s inertia and entice them to invest in renewable energy sources. To prematurely reduce the feed in tariff rate is bad enough, but to bring the changes in with almost immediate effect, leaving consumers little or no time to buy PV solar is frankly unforgiveable. The consequences of this short sighted hypocrisy will be far more companies going bust and far more people joining the dole queue than was the case with HIPs. This madness may well finish off the UK solar industry altogether, which was one of the very few sectors thriving in these very difficult economic conditions.

Going forward, this act will send shock waves through the very trades and industry sectors that the Tories will need to rely upon to deliver their “Green Deal” next year. What individual or business will now trust this government on the new Green Deal initiative? Most, if they have any sense, will now shy away from investing in it or becoming involved in it as, quite frankly, you simply cannot trust the word of this government any more. Cameron’s pre election claim to be, if elected, the “greenest government ever” is in tatters and a complete joke now.

Cameron, Clegg and Osbourne clearly do not grasp the urgency of the UK’s need to start weaning itself off fossil fuels and onto renewable energy sources. They are clearly more interested in foreign policy and tinkering around the edges of the EU than focusing on the problems at home and the needs of their own electorate. It is little wonder therefore that we are seeing signs of increased civil unrest in the UK and I predict far more to come.

Finally, the Tories may have inadvertently alienated themselves with the very core of voters they have traditionally relied upon for support. The demographic of our typical solar customer is age 50+, little or no mortgage and with savings on deposit. For many of these people the motivating factor to invest in solar wasn’t environmental but financial. For years now they have witnessed the buying power of their hard earned savings being eroded by a combination of low interest rates and rising inflationary costs. With worldwide markets and banking systems in turmoil, these investors have been too frightened to invest in risky vehicles such as stocks, shares or bonds. For them, solar was financially a “no brainer” as it afforded them a risk free investment with a double digit, index linked tax free income for 25 years. Plus of course, free daytime electricity to counteract the ever rising utility bills. This sector of the electorate will be furious if these proposed changes come in with immediate effect; thus denying them the opportunity to invest before 31/03/2012.

It will be interesting to see how Middle England voters react at the election booths next year and Cameron may well be in for a rude awakening.

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Energy Saving Trust “let’s the cat out the bag” early on Feed-in Tariff plans

For weeks now there have been rumours circulating within the solar industry that the government were considering slashing the current feed in tariff rates for PV solar drastically, as, in their opinion, they had become too generous.

The rumour and speculation came to a head yesterday (Thursday the 27th of October) when an article appeared on Martin Lewis’ “moneysavingsexpert” website, stating that he too had heard a strong rumour that the feed in tariff was to be cut from 43.3 pence to 28 pence and that an announcement was to be made today; Friday the 28th of October. I just happened to be in London yesterday attending the annual conference of the Energy Efficiency Partnership for Homes (EEPH) and the keynote speaker was none other than Chris Huhne himself. After his speech he invited questions from the audience. I seized this chance to ask him categorically whether he would confirm or deny these rumours. In true politician style, he gave me a long winded answer, which seemed to imply that yes he thought it was too generous and yes an announcement was imminent.

Today, Friday, the Energy Saving Trust has been forced to issue a statement after details of Government plans to cut the Feed-in Tariff programme were mistakenly posted on its website. The document, which revealed details of a cut in cash subsidies for solar PV generation from 43p/kWh to 21p/kWh, was uploaded on the organisation’s website this morning. The plans, which also included a surprise move to bring forward the changes to December 8, were scheduled to be announced to Parliament on Monday. However, by this afternoon the Energy Saving Trust had removed the document and issued a statement saying the leaked document was made available following a “technical error”. The statement added:

“We’ve been working on a draft consumer guidance document in relation to the Fast Track Review of Feed in Tariffs for Solar PV to pre-empt the Government consultation which is expected next week.

“Preparing advice on a potential announcement was the responsible thing to do as the leading consumer advice body in this area. Unfortunately, due to a technical error this document was made available for search.

This is a work in progress document which is no longer on our web site and cannot be relied upon as the Government consultation has yet to be announced. Then and only then will we know the precise contents.

We cannot confirm anything within our fact sheet until then.”

This in turn has prompted a statement from the Dept of Energy and Climate Change (DECC). Their spokesman said:

“We’ll be publishing a full consultation on changes to the solar PV tariff changes in parliament on Monday. The Energy Saving Trust inadvertently published a draft of documentation on its website that was neither final nor accurate.”

If these changes do indeed get parliament approval on Monday, it will kill the demand of domestic PV solar stone dead, with immediate effect. Most companies, ourselves included, are working to a 4 or 5 week lead time (the time between a customer placing an order and us doing the install). The solar industry will be furious but I’m equally sure that the general public will be too. To have this foisted upon them, without consultation or having an opportunity to react is grossly unfair. We are receiving more and more new solar enquiries every week, but now all these people will be denied the opportunity to invest in PV solar as they wanted to AND as the government had previously been encouraging them too.

If this cut goes ahead it will be the third government review into solar subsidies this year and this from a political party whose leader, before the last election was quoted as saying that, if elected, they would become the “greenest government ever”. With public trust in UK politicians at an all time low and the British economy faced with the very serious possibility of a double dip recession; for the Tories to be tinkering with the only sector of our economy which is currently booming is, in my opinion, completely BONKERS.

Jim Gillespie
National Sales & Marketing Director
1st 4 Solar

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Solar Demand pushes silver prices skywards

According to the BBC news channel today, silver is now worth about nine times more than it was 10 years ago, and the price of gold has risen by 50% in the last year alone.

Over the last decade, industrial consumption of silver grew by 39% from 349.7 million ounces in 2001 to 487.4 million ounces in 2010. Industrial demand still accounts for 50% of the global silver demand and that is expected to reach 70% over the next decade given the large increase in applications that require silver.

Silver’s properties make it an excellent choice for many applications, especially in the electrical and electronics sector. Silver is the best choice of metal for electricity conduction, thermal heat transfer and light reflection. Advances in the clean tech and renewable energy market, particularly in the solar photovoltaic (PV) industry, are fuelling the demand for the metal.

In ‘The Future of Silver Industrial Demand’, a recent study commissioned by the Silver Institute, research consultancy GFMS said, “The rise in solar power is arguably the most significant development for silver demand in recent years. This year, demand is expected to reach nearly 70 million ounces, an increase of around 40% year-on-year.”

During a recent interview with Hard Assets Investor, Stephen Leeb, chairman and CIO of Leeb Capital Management, said that he firmly believes China’s demand for silver from its solar panel industry will push silver prices to above $100 per ounce. China currently spends almost $1 trillion on alternative energy and the country has a 50% share of the global solar market. So far China has been developing and acquiring poly silicon faster than any other nation and soon it will be silver’s turn. Leeb believes that most investors and analysts are not paying enough attention to China’s fast growing solar PV industry.

According to solar market research group Solarbuzz, the US market for solar PV applications is expected to account for 12% of the global market by 2015, a sharp hike from the current level of 5%. Demand from the Asia Pacific market—comprising Australia, China, India, Japan, and South Korea—is expected to grow from the current 11% to almost 25% by 2015. In fact, the sector could cause silver consumption to rise from the 50 million ounces recorded in 2010 to 100 million ounces in 2015. China currently purchases the highest quantity of silver, and demand in China and India is expected to grow by almost 30% this year.

Manikbhai Shah, a silver retailer in Mumbai said, “China imported 245.6 metric tonnes of silver in February. The figure was so close to the 260.6 metric tonnes that the country imported last February and it showed that China was willing to shell out money for the white metal at over $30 per ounce.”

This boost in both gold and silver prices affects you and I in a number of ways. It is now more expensive to buy gold or silver jewellery and pawn brokers are now seeing their businesses boom as consumers cash in their unwanted watches and jewellery. The BBC news story featured around the fact that many of us are now under insured due to the surge in gold and silver prices; so perhaps it’s time you checked your household insurance policy again. Whilst you are at it, if you have already had solar panels fitted to the roof of your property we advise that you inform your insurer, if you haven’t already done so. This shouldn’t affect your insurance premium and it’s always better to give full disclosure of material facts now, in case it goes against you should you ever need to claim for roof repairs after storm damage or similar “acts of God”.

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All hands on DECC

In June, DECC confirmed plans to slash tariffs for solar schemes above 50 kilowatts peak capacity from 1 August. It wants to limit larger schemes’ impact on electricity bills and channel more funding to household-level projects. However, several developers realised they could benefit from the higher rates if they built projects before the deadline and expanded them over the next 12 months.

Under the Feed-in Tariffs Order 2010, Ofgem, which runs the scheme, must consider any project expansion within 12 months as part of the original development and award it the same tariff.

Projects between 101kW and 5MW built before 1 August receive 30.7p per kilowatt hour of electricity generated. After this deadline, the rate drops to as low as 8.5p/kWh.

A 101kW project could become 50 times bigger in the year following 1 August and still claim the original tariff.

On July 27th the energy and climate department (DECC) issued a consultation on closing this loophole allowing solar firms to avoid forthcoming feed-in tariff cuts. The change is needed urgently, DECC says, so the consultation will run for only five weeks.

DECC’s consultation says keeping this loophole open “would have a considerable impact on the FITs [budget] and the integrity of the scheme”.

If eight 5MW projects took advantage of the loophole, the cost of FITs would rise by £190m over 25 years. The department admits it does not know how many schemes are looking to take advantage of the rules, and says it could be more than this.

The consultation runs until 31 August. The change would come into effect as soon as possible afterwards.

DECC intends to change article 15 of the order to close the loophole. Developers expanding projects will now receive “the relevant tariff at the rate applying when the extension is commissioned, rather than the rate which applied when the original installation was”.

The change would affect all developers looking to claim FITs, not just solar PV firms, because FITs rates are subject to regular review. Those paid to wind projects also drop annually from April 2012 to take account of expected technology development.

The consultation’s impact assessment team admits the change could affect investor confidence.

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A ray of light in the energy gloom

You could almost hear the pips squeak when Scottish Power and British Gas recently announced massive energy price rises. With energy costs spiralling, homeowners are looking for greener, cheaper ways to run their homes and renewable energy is suddenly big news.

The Government’s feed-in tariff (FIT) scheme offers cash payments to homes generating their own electricity from solar photovoltaic (PV) panels. Although solar systems are a significant financial commitment, typically between £6,000 and £12,000; the potential profits from FITs are impressive, with 43.3p per kWh for all energy you generate and an extra 3.1p on top of that for energy that you send to the grid. A unit of electricity (kWh) costs approx. 13 pence per unit from your utility company, which means that you are being overpaid by at least 30 pence for every unit of electricity your solar panels produce. This in turn means you can expect to see a return of your initial capital outlay in between 6 and 7 years. This is good news as the FIT is paid to you, tax free and index linked for 25 years, plus of course you will be receiving free electricity courtesy of your solar panels, during daylight hours.

Planning permission is not normally required when fitting solar panels, unless you live in a conservation area or listed building. 1st 4 Solar have fitted solar panels to domestic households within conservation areas in both Hartlepool and Stockton on Tees. We offer a free, no obligation service whereby we will visit your home or business premises, discuss how the system works, advise you as to the best position to fit your solar panels and then leave you with a written quotation.

One important point for you to remember is that the FIT is at it’s highest level right now. It is due to be reduced from 1st of April next year, but the new coalition Government are on record as saying they plan to review the FIT rate thereafter. This will most probably mean they will cut the FIT rate even further than anticipated. Therefore, if you are considering having solar panels fitted the best time to do so is right now. By doing so you are locking into the highest FIT rate, which is then paid to you tax free and index linked for the next 25 years.

With interest rates stuck at 0.5% many people are taking money off deposit and investing in solar energy instead.

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