In light of the recent legal debates regarding the FiT, Ministers have came out claiming it was a necessity to slash the subsidies as quickly as they did, because the cost of the panels has nearly halved in the past year. This is a much faster drop than was envisaged when the plan was put in place.
In 2010 the average domestic solar installation cost around £15,000 but this dropped to almost £8,000 in 2011 and is expected to hit £6,000 in the coming months.
The UK Energy Minister is expected to be announcing a reformation of the feed-in tariffs so that the subsidies gradually reduce in relation to the cost of the panels and installation.
This is very similar to current German system the idea is to ensure that the rate of return is maintained at around 5%. The common consensus is that 5% is enough of a return to give everyone the necessary incentive i.e. purchasers, installers and manufacturers.
The original allocation for the scheme was around £860m but this is expected to be increased to around £1bn. The tariffs are actually paid by additions to energy bills and not from public funds however the concern is that without some kind of slowdown on the scheme people bills could increase far too quickly.
Originally, the tariffs were allocated about £860m but this is likely to be increased to about £1bn. The tariffs are paid by additions to energy bills, not from the public purse, but the Treasury has limited the amount that can be spent on them because of fears that bills would rise too fast unless there is a brake.
The additional cash is being siphoned from large scale renewable projects that have been completed under budget.
One of the main reasons for current state of flux regarding the FiT is the massive investment in China that has resulted in hundreds of solar panel factories aimed solely for exports, thus driving down the cost of solar panels in the UK.
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