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You may or may not have heard the recent news from the DECC about the proposal to reduce the subsidy for Solar PV systems by more than 50%. It was announced on the 19th November that the current feed in tariff would be reduced on all installs completed after the 12th December. The reductions were originally coming into force in March 2012, bringing forward the deadline by over 4 months. The announcement has dealt a huge blow to the industry, jeopardising many jobs and sending out consumer speculation as to what the future holds. In the lead up to the reductions the entire industry has been in a frenzy to complete installs and get them commissioned to secure the current highest rate of feed in tariff. Demand for panels went through the roof, the largest supplier in the UK reported they sold two months worth of stock in two days. The past 6 weeks has been very stressful for everyone involved and to be quite honest, unnecessary. A longer period should have been provided to give ample notice to both the industry and consumers.
Now that the deadline has passed and the dust settled, what does the future hold for PV? I have looked at how the reductions effect the payback and ROI of the systems and it has put us back to the returns we started with. 8% ROI is still better than any bank can offer, especially being tax free and index linked with inflation. 10-12 years payback still means a tidy profit over the 25 year FIT lifetime. However, the suppliers I have been speaking to, all say that they will be reducing their margins which should start to see the ROI start to creep up into double figures again. All I can say is, although the returns aren’t as good as they used to be, Solar PV is still a very attractive investment whilst helping save the environment!
For more in depth information please follow me on twitter @TLGEC
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