Government Solar FIT Cuts – Update

Previously we discussed the effects of the government’s decision to cut the solar FIT (feed in tariff) rates to investors and individuals investing in solar panels. A lot has happened since last year and we thought we would update you on the current FIT situation.

I’m sure many of you are aware that there has been opposition from many within the industry since the government’s announcement and they have been involved in a legal battle. On the 21st of December these cuts were declared as unlawful. The challenge was made by Solarcentury, Homesun and Friends of the Earth. The high court ruling now means by law anyone registering for FIT scheme will now be able to receive the current 43.3p rate for the full 25 years.

However the Government also launched an appeal on the 4th January 2012. They want to change this decision and move back the date to the 12th December 2011. The Department for Energy & Climate Change also have halved the FIT for anyone installing after the 3rd March 2012.

From the 1st of April 2012 to qualify for the FIT you will also have to produce an energy performance certificate of grade D or higher. It is believed that half of all properties already meet this standard.

There are further proposals to halve subsidies again in April 2013. The plan is to slash the FIT cuts again in July 2012 by another 20%. Then the tariff would drop in October 2012 and then finally in April 2013. This obviously depends on the current sign up rate; if too many people install solar panels they may introduce these cuts earlier.

See here for the latest info:

Government Solar FIT Cuts : The Hidden Risks

Whilst it is clear that the recent Solar FIT cuts will put much financial pressure on many solar companies once the 12th December 2011 has come and gone, has the government however considered the increased dangers to the installers/workers themselves over the coming weeks.

The installation of solar panels is already deemed by the insurance industry as a relatively high risk trade with the inherent risks involved to employees and third parties whilst working at heights. As insurance brokers specialising in the renewable/solar energy sector we are more than a little concerned about the increased risks associated with the recent FIT cuts and the pressures put on solar companies within such a short period of time.

Solar panel installers across the country will have taken deposits and made promises to customers that their solar/pv systems will be operational by the 12th December 2011. Most installers have large order books which closed soon after the cuts were announced. The insurance industry is bracing itself for an increased number of insurance injury claims in the coming weeks and months due to the following factors –

Installers are having to work much longer hours in the lead up to the 12th December deadline with work not finishing until the early evening where workers are having to work in part darkness. The chances of injury occurring where visibility is poor is far more likely than working in daylight.

With the longer hours comes tiredness and reduced concentration (when accidents usually happen) The likely drop in temperature in December could lead to ice on the roofs of buildings and on the ground making the work area dangerous.

There is clearly a shortage of solar equipment (panels, inverters etc) within the industry at the moment with installers buying up all stock to satisfy their order books. Installers are resorting to using poorer quality products/lesser well known manufacturers which not only increased the dangers to installers having to work with these sub standard products but also the issues later down the line with reliability of the equipment.

With order books being full until the 12th December deadline many installing business are finding it difficult to find sub contract labour to assist in the installation work. This could lead again to longer hours for the direct workforce and consequently companies using more unqualified/unskilled workers with the increased dangers to injury to workers who are not trained/skilled correctly.

In summary the time frame imposed by the government for the FIT cuts is putting extreme pressure on solar companies and workers up and down the country. Whilst the financial impact on the solar industry will make the headlines it could be more than just pounds and pence at stake.