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BRIEFING PAPER
Number 8090, 7 February 2020
Q&A: solar panels By Suzanna Hinson Lorraine Conway
Contents: 1. What support is available? 2. Issues with solar panel
installations 3. Solar panel sales and contract
problems 4. Insolvency of the solar
supplier 5. Impact on house sales of free
solar panels 6. Types of solar inverters 7. ‘Right to Light’ for solar
panels 8. Where to go for further
assistance 9. Annex: Feed-in tariffs
2 Q&A: solar panels
Contents Summary 3
1. What support is available? 4 Green Deal 4
2. Issues with solar panel installations 5 2.1 The Energy Ombudsman 5
3. Solar panel sales and contract problems 6
4. Insolvency of the solar supplier 8 4.1 Credit card payments and insurance in the case of insolvency 8
5. Impact on house sales of free solar panels 9
6. Types of solar inverters 10
7. ‘Right to Light’ for solar panels 11
8. Where to go for further assistance 13
9. Annex: Feed-in tariffs 14 9.1 Background on FITs 14 9.2 Free solar panel offers 14 9.3 Payments and EPC ratings 15
EPC exemptions 15 9.4 Tariffs and registration date 16 9.5 Registering solar panels 16 9.6 Change in regulation 2016 17 9.7 Closure of the FIT scheme 18 9.8 SEG proposal 18
Cover page image: Solar panels placement. Licenced under Creative Commons CC0 – no copyright required / image cropped.
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Summary Solar panel electricity systems, also known as photovoltaics (PV), capture the sun's energy using photovoltaic cells. These cells don't need direct sunlight to work – they can still generate some electricity on a cloudy day. The cells convert the sunlight into electricity, which can be used to run household appliances. Any excess electricity generated by the panels can be exported to the grid.
Previously the Government supported domestic solar panels through the Green Deal loan scheme, launched in 2013, and Feed-in Tariffs which provided payments for generating renewable energy, launched in 2010. The Government stopped publicly funding the Green Deal in 2015, and the Feed-in tariff scheme closed at the end of March 2019. From 1 January 2020, a new scheme, known as the Smart Export Guarantee, has required electricity suppliers to offer a tariff for power that solar (and other technology) generators export to the electricity grid.
Solar panels boost the UK’s renewable capacity and can reduce household consumption, and possibly bills, for homeowners with panels. However, there are some common questions and concerns that are raised about solar panel installations that this briefing paper addresses.
4 Q&A: solar panels
1. What support is available? Smart Export Guarantee Since 1 January 2020, support for solar power and other renewable power generators is available under the Smart Export Guarantee (SEG). The SEG replaced the previous Feed-in Tariff (FIT) scheme that closed in March 2019. Details of the FIT scheme are available in Section 9.
Under the SEG, energy suppliers offer tariffs for power that renewable generators export to the electricity grid. The tariffs must be more than £0 per unit of power, and generators can switch supplier if they wish to get a higher export tariff rate. A ‘league table’ of tariffs and some further information on the scheme is available from the Solar Trade Association (an industry trade body).
Background information and commentary on the SEG is available in the Library briefing paper on Support for small scale renewables (January 2020).
Renewable Heat Incentive There is also support for renewable heating under the Government’s Renewable Heat Incentive (RHI) scheme. The RHI provides payments to generators who install eligible renewable heating technologies. More information and commentary is available in the Library briefing paper on the Renewable Heat Incentive (April 2017).
Green Deal The Green Deal was an energy saving scheme launched by the coalition Government to incentivise and help fund energy efficiency and renewable energy technologies for homes. The scheme involved loans for investing in low carbon efficiency measures that consumers could pay back over time through their energy bills whilst benefiting from cheaper bills due to reduced consumption. The Government stopped funding the Green Deal in 2015 citing low uptake. Constituents may still be able to obtain loans under the Green Deal framework through private providers.
The following sections refer to common questions that constituents may have experienced with solar panel installations, including while the Feed-in Tariff scheme was still operating.
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2. Issues with solar panel installations
While the majority of solar panels are installed and operated without issue, some consumers have experienced problems. Ofgem, the energy regulator, set out where consumers can go if they have a complaint:
If you have a complaint about your installer, your first point of contact should be your installer. If the complaint is not resolved, you can approach the certification body for the installation company. Details of the correct certification body can be found on the MCS website. Alternatively you can approach the Renewable Energy Consumer Code (RECC) to escalate the complaint.
The guidance also sets out that if the complaint is about a FIT licensee, constituents should contact the licensee (the supplier paying the Feed-in Tariffs), who should help resolve the complaint according to their complaints procedure
2.1 The Energy Ombudsman The Energy Ombudsman deals with unresolved complaints with energy suppliers. The Energy Ombudsmen’s website details the types of complaints it can and cannot deal with. For solar power, the Ombudsman can deal with some FIT and Green Deal claims, as well as issues with the way a product has been sold (including door stop sales). The Ombudsman cannot deal with some issues, such as commercial decisions made by companies about whether to provide a product or service.
If, once the Ombudsman has made a decision, either party disagrees with the result, they can write and request a review, but only if they believe the Ombudsmen has made a significant error, or a party has important new evidence that would have a material effect on the decision, had it been available earlier.
If the consumer declines the decision or fails to respond with the given timeframe, the consumer loses the right to the solution offered. The Ombudsman’s final decision cannot be challenged and there is no right of appeal, but a consumer can still take a complaint to the court.
The Ombudsman does have its own complaints procedure for customers who are unhappy with the service they received.
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3. Solar panel sales and contract problems
Solar panel contracts can be agreed at the consumer’s home. Under the Consumer Contracts (Information, Cancellation and Additional Charges) Regulations 2013 (known as “the Consumer Contracts Regulations”), traders are obliged to give consumer buying goods, services or digital contact at a distance (e.g. online or over the telephone) or “off-business premises” (e.g. at the consumer’s home), certain key information before the contract is entered into. The Regulations also specify how the information must be provided. The Regulations came into force on 13 June 2014 and apply to contracts entered into on or after that date.
For sales concluded at the consumer’s home (i.e. off-business premises), key information which the trader must provide to the consumer includes:
• a description of the goods, service or digital content, including how long any commitment will last on the part of the consumer;
• the total price of the goods, service or digital service or the manner in which the price will be calculated if this cannot be determined;
• how the consumer will pay for the goods or service and when they will be provided to the consumer;
• all additional delivery charges and other costs (and if these charges can’t be calculated in advance, the fact that they may be payable;
• details of who pays for the cost of returning items if the consumer has a right to cancel and change their mind;
• details of any right to cancel the order (the trader to make available a standard cancellation form to make cancelling easy - although the consumer is not under any obligation to use it); and
• information about the seller (including their geographical address and contact details and the address and identity of any other trader for whom the trader is acting)
Failure to provide the required information, or to provide it in the way set out in the Regulations, could result in the consumer’s cancellation rights being extended by up to one year.
Arguably, the most important provision is a consumer’s the right to cancel an order for goods or services made “off-business premises”. This right to cancel an order starts when he/she receives the goods and lasts for 14 days.
If the constituent entered into a contract prior to 13 June 2014, the Distance Selling Regulations 2000 will still apply. There is a useful guidance note on the Distance Selling Regulations from consumer group Which?.
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In addition, the Consumer Protection from Unfair Trading Regulations 2008 (known as the ‘Unfair Trading Regulations’), impose a general prohibition on traders in all sectors from engaging in unfair commercial practices with consumers. It follows from this that there is a duty to trade fairly and honestly with consumers. Further detailed information is provided in a Library briefing paper on the Regulations (CBP 4678).
In general, if a good is mis-sold then there may be a claim for misrepresentation (much would depend on the exact circumstances of the case). This essentially means that the consumer relied on inaccurate information which persuaded him/her to buy the good and enter into a contract with the seller. The main solution for misrepresentation is rescission (i.e. to end the contract and get back any money paid). The other remedy is to claim for damages (i.e. monetary compensation). This means the contract continues, but compensation can be claimed to put the consumer in the position they should have been in had the contract been performed properly.
With solar panel mis-selling, claiming for damages could be problematic. This is because it may be difficult to put a figure on the loss sustained. For example, if a consumer received false information about the capabilities of the installation and the savings it could deliver, it would be necessary to put a figure on precisely how far it falls short and exactly how much will be lost. This could be extremely difficult if the performance is dependent on certain conditions such as the weather. In addition, most people don’t know how long they will live in a house and therefore how much they stand to lose overall. To pursue a misrepresentation claim would require proper legal advice based on a full appraisal of the facts and the merits of the case.
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4. Insolvency of the solar supplier Some consumers who have installed faulty solar panels or are the recipient of a worthless guarantee are often outraged to find that the directors of an insolvent solar company may suffer little personal loss and are able to start up overnight a new business in the same field. This is not unique to companies that sell and install solar panels. To a certain extent this is an inevitable consequence of corporate ‘limited liability’. For the purposes of the law, a company is a separate legal entity and if it trades with limited liability its directors and shareholders do not usually retain liability for the company’s debts should it become insolvent.
A so-called “phoenix company” is where the assets of an insolvent business are re-acquired (often at less than their full value) by its former directors (or closely connected parties) who then set-up a new company involved in the same or similar business. Legally, there is nothing in law to prevent a director of a failed company from starting a new business 'overnight' provided that they have acted 'properly' in managing the first company both before and during its insolvency. However, if the director of an insolvent company has deliberately acted to the detriment of creditors, action may be taken against them under both insolvency and company legislation. In certain circumstances, directors may incur personal liability for their acts or omissions in managing the company.
A Library briefing paper, ‘Phoenix trading ’(December 2019) looks in detail at the legality of phoenix trading and at the personal liability of directors to the creditors of an insolvent company. In addition to the Insolvency Act 1986 (as amended) and the Enterprise Act 2002, this note looks at provisions contained in the Small Business Enterprise and Employment Act 2015.
4.1 Credit card payments and insurance in the case of insolvency
It is worth noting that if a consumer paid some (or all) of the cost of the installation using a credit card (or used finance provider by the supplier), they might have a claim under the Consumer Credit Act 1974. Under section 75, the provider of credit (i.e. the credit card company) is equally liable with the provider of goods or services in cases where there has been misrepresentation or breach of contract. The consumer should seek legal advice from their local Citizens Advice Bureau on whether section 75 would be applicable to the facts of their case.
In addition, a consumer should check if the insolvent company carried any indemnity insurance. If there was such a policy, it might be possible to make a claim (although much would depend on the scope of the risk covered). Consumers should also check the extent of their own household insurance.
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5. Impact on house sales of free solar panels
During the period FITs were available, a market of solar photovoltaic panel providers emerged, offering free installation of solar panels onto roofs of residential housing in the UK (see section 9.2). The providers received a FIT payment, and those who had the solar panels installed, received free electricity generated by the panels. Providers had settled on the use of a lease of airspace above the roof to protect their interest (they retain ownership of the solar panels).
In effect, the householder entered into an agreement to lease their roof space to a private company to install free solar panels – the householder received free electricity and the company received the FIT payments. In some cases, however, the owners may have experienced problems selling or re-mortgaging their homes.
Many mortgage providers required minimal standards to be met before they consent to any solar panel agreements. The industry body Council of Mortgage Lenders (now UK Finance) provided the following advice at the time:
CML and BSA have produced joint guidance for providers on what lenders will typically seek comfort on before consenting to the lease of roof space. The guidance includes a template letter which can be used by the panel providers to confirm to lenders that their lease complies with the minimum requirements set out in the guidance. At this stage, the guidance applies to England and Wales only, however guidance for Scotland and Northern Ireland will be considered.
Please note that this is guidance and as such, it is issued to inform the market of typical lender requirements. Given the complexity and variation of solar (PV) schemes and leases it cannot cover all issues but sets out areas where lenders may have minimum requirements. As with all guidance, it will be reviewed regularly.
The Law Society also published an article in October 2012 on ‘The pitfalls of solar panels’ setting out some of the issues a homeowner should consider before leasing their roof space to a private company.
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6. Types of solar inverters A solar inverter is a device that converts the variable direct current output of solar panels into a utility frequency alternating current that can be fed into a commercial electrical grid, or used by the homeowner.
There are two main different types of domestic solar inverter: micro and string. Micro inverters are advanced inverters, which enable monitoring of how a system is performing, and can provide diagnostic information to help fix issues. They also have the potential to take on decision-making and control functions to help improve grid stability and efficiency, especially when combined with battery storage. Micro inverters have up to 25 year warranties.
String inverters have a shorter lifetime, usually with 10-12 year warranties and do not offer advanced features. Consumers with solar panels and string inverters are likely to have to replace the inverter over the course of the lifetime of the panels.1 More information on inverters can be found in a document on Solar inverters from the Energy Saving Trust.
There are currently no government grants towards inverter replacement but if the efficiency of the panels are increased by a new, more efficient inverter, then it is possible that a consumer will see an increase in their smart export guarantee or feed-in tariff payments as they will be producing more power.
1 The eco experts, Average Costs of a Solar Inverter, [online] (accessed 7 February
2020)
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7. ‘Right to Light’ for solar panels New building work can shade existing solar panels, which can lead to questions about a ‘right to light’. To date, there is no case law applying the principle of ‘right to light’ to solar panels.
‘Right to light’ is separate from planning law and is an easement that gives a landowner the right to receive light through defined apertures in buildings on his or her land. There is a ‘right to light’ for windows if a building has “enjoyed” that light for 20 years, outlined in Section 3 of The Prescription Act 1832:
When the access and use of light to and for any dwelling house, workshop, or other building shall have been actually enjoyed therewith for the full period of twenty years without interruption, the right thereto shall be deemed absolute and indefeasible, any local usage or custom to the contrary notwithstanding, unless it shall appear that the same was enjoyed by some consent or agreement expressly made or given for that purpose by deed or writing.
Case law has shown that on occasion, new buildings can be prevented due to a ‘right to light’ for windows, though each case is specific and there is no right to all the light.2
In 2014, the Law Commission, an independent body created under the Law Commissions Act 1965 to keep the law in England and Wales under review, published a report on Rights to light. On solar panels, the report stated that the existing law was “not clear”:
2.79 It is not clear how the existing law on rights to light (which is founded on the sufficiency of light passing through windows and into the rooms beyond, not upon photovoltaic surfaces) can accommodate solar panels. Consequently, we do not think that solar panels can benefit from rights to light as presently understood. Furthermore, consultees’ concerns are not entirely addressed by making it possible for rights to light to benefit solar panels. The acquisition of an easement by prescription takes 20 years, but consultees, for the most part, appear to be arguing for protection for solar panels to arise as soon as they are installed. The effect of this would be to give one owner a wholly novel right over another’s land, restricting the use of a neighbour’s land without first giving its owner any opportunity to avoid that happening.
2.80 Even if we were to overcome concerns about the nature and scope of such a right, we remain concerned that the potential for the right to be acquired by prescription will exacerbate, to an uncertain but potentially significant extent, the problems that are caused now by rights to light.
2.81 We note here one final point in respect of solar panels. We are aware of the suggestion that it can be problematic for those who pay to install solar panels in anticipation of the receipt of money through a “feed-in tariff” (and lower electricity bills) only to discover that planning permission is later given for a development that renders the solar panels less effective. It has
2 Raymond Cooper Consultant Property Lawyer, Solar Panels and the Right to Light,
2012
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been suggested to us that it is unfair that a landowner seeking to benefit from a scheme promoted by a limb of Government should have that benefit removed or reduced by another public body through the grant of planning permission.
2.82 A solution to the issue described above, if one is required, is outside the scope of this project. Even if a right to light could protect the passage of light to a solar panel it would give no immediate protection (unless a neighbour expressly granted the right to light), meaning that solar panels would be protected in the same haphazard way that rights to light presently benefit buildings. We think that if a solution is required, then it lies in the law that governs in what circumstances planning permission should be granted.
2.83 Accordingly, we do not make any recommendation that allows the creation of easements that benefit solar panels.
The Government have not responded to the Law Commission’s report, though when the consultation for the report was announced in 2013, a Government press release quoted a Department for Communities and Local Government spokesman saying:
This is a consultation by the independent Law Commission, which is seeking to update and improve confusing and fragmented land law and legal rulings which date back to 1832. The right to light is entirely separate from planning law. Such proposed land law reform is no different from the Party Wall Act 1996 which consolidated complex legislation on land boundaries that dated back to the 17th Century. The government recognises how important natural light is to people and is absolutely committed to the protection of their rights to it.
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8. Where to go for further assistance
Microgeneration Certification Scheme (MCS)
A nationally recognised quality assurance scheme, supported by the Department for Business, Energy & Industrial Strategy. MCS is an eligibility requirement for the Government's financial incentives, which include the Feed-in Tariff and the Renewable Heat Incentive.
Renewable Energy Consumer Code:
Covers the behaviour of the company, including incorrect information provided about eligibility, deadlines or application procedures for government grants or incentives, and misleading information about the financial benefit of the system. They have a dispute resolution process for consumers and the installers.
Simple Energy Advice
Developed in conjunction with the Government to provide impartial energy advice.
Energy Saving Trust
An independent and impartial advice service. The website also has information on feed-in tariffs and other government schemes.
Citizens Advice Bureau (CAB):
The CAB provides free, independent, confidential and impartial advice. They can be contacted about the merits (or otherwise) of beginning proceedings in the Small Claim’s Court. The Citizens Advice website contains a useful tool to help people to find their nearest CAB.
Energy Ombudsman
The Ombudsman provides impartial decisions on unresolved complaints with energy suppliers.
Other legal advice:
More information can be found in a separate Library briefing paper: Legal help: where to go and how to pay (August 2019)
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9. Annex: Feed-in tariffs The feed-in tariff (FIT) scheme closed to new applicants in March 2019. The information below may be helpful to generators who applied to the scheme while it was still open, and will remain on the scheme for the length of their tariff period.
9.1 Background on FITs Ofgem (the energy regulator) have a webpage on About the FIT scheme:
The Feed-in Tariffs (FIT) scheme is a government programme designed to promote the uptake of renewable and low-carbon electricity generation technologies. Introduced on 1 April 2010, the scheme requires participating licensed electricity suppliers to make payments on both generation and export from eligible installations.
The Energy Saving Trust (an independent organisation advising on energy and efficiency) has a webpage on Feed-in Tariffs that gives more details on the payments, explaining that eligible generators could benefit from FIT payments in three ways:
Generation tariff: your energy supplier will pay you a set rate for each unit (or kWh) of electricity you generate. Once your system has been registered, the tariff levels are guaranteed for the period of the tariff (up to 20 years) and are index-linked for inflation.
Export tariff: your energy supplier will pay you a further rate for each unit you export back to the electricity grid, so you can sell any electricity you generate but don't use yourself. At some stage smart meters will be installed to measure what you export, but until then the energy you export is estimated as being 50 per cent (75 per cent for hydro) of the electricity you generate (only systems above 30kWp need to have an export meter fitted, and a domestic system is unlikely to be that big). Similarly, the export tariff is index-linked for inflation.
Energy bill savings: you will be making savings on your electricity bills because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.
9.2 Free solar panel offers Following the end of the Government’s Green Deal scheme in 2015 there were no government grants for solar panels (as feed-in tariffs were payments for installations which the customer pays for upfront). Over the years of the FIT scheme, some companies offered solar panel installations for free. They benefited by collecting both the generation tariff and export tariff from FITs. The customer should still have benefited from energy bill savings as they could have consumed less from the grid and instead used the electricity from the panels. As energy bills fluctuate with the various costs of supplying energy, it is possible that bills still went up, although by less than they otherwise would have if there were no solar panels.
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These schemes often involved the customer leasing their roof to the company. The company then retained ownership of the solar panels. These arrangements could impact house sales as Section 5 details. In addition, there were reported problems with these schemes such as contract misselling, company insolvency and a lack of maintenance of the panels.
Similarly, some companies offered loans for solar panels that consumers could pay back over time. These schemes resulted in some problems as consumers could enter into long-term contracts with interest rates without understanding these conditions. Solar panel contract issues are covered in Section 3.
Please note the House of Commons Library does not provide advice for individual cases. The above information is generic and consumers with specific problems should seek appropriate advice.
9.3 Payments and EPC ratings There were a range of FIT payments that varied based on the time the panel was registered, the energy efficiency of the property and the number of installations. Energy efficiency is given a value through an Energy Performance Certificate (EPC), which rates a property from G (bad) to A (good). An Energy Performance Certificate (EPC) had to be obtained and submitted as part of a FIT application.
Based on the EPC and number of installations, tariffs ranged between three categories: higher, middle and lower. According to Ofgem’s page on FIT rates:
The rating is based on if the Energy Efficiency Requirement for the building that the PV is wired to provide electricity to has been met and if the owner has multiple installations:
• Higher- EPC of level D or above was issued before the commissioning date of the installation, and the owner does not have 25 or more installations
• Middle- EPC of level D or above was issued before the commissioning date of the installation, and the owner does have 25 or more installations
• Lower- EPC of level D or above was not issued before the commissioning date of the installation.
It was important to ensure that an EPC was completed before the commissioning date of the installation to prevent the panel owner from being put on the default lower tariff.
EPC exemptions Certain buildings could be declared exempt from the EPC requirements. For some buildings, such as those used for industry and farms, getting an EPC to receive the higher rate tariff could have been difficult as the building may have been challenging to insulate and may not have benefited from insulation. European Directive 2002/91/EC on the energy performance of buildings defines “building” as:
[…] a roofed construction having walls, for which energy is used to condition the indoor climate; a building may refer to the
16 Q&A: solar panels
building as a whole or parts thereof that have been designed or altered to be used separately.
According to Ofgem’s guidance to licensed electricity suppliers, the EPC requirement only applied to “relevant buildings”:
5.36. […] If any aspect of this definition does not apply to a building to which the PV installation is wired to provide electricity to then the energy efficiency requirement does not apply.
5.37. A “relevant building” must also be a building in respect of which an EPC can be issued. If an EPC cannot be issued then the building is not a relevant building and the energy efficiency requirement does not apply. Under the Energy Performance of Buildings (EPB) Regulations some properties are exempt from the requirement for an EPC; however if a building can be assessed and receive an EPC then the energy efficiency requirement will apply under FIT legislation (irrespective of whether an EPB exemption applies or not).
5.38. It is the responsibility of the FIT Generator to prove that an EPC cannot be obtained for any building that the PV is wired to provide electricity to. One option to demonstrate this would be for the FIT Generator to provide a document from an EPC assessor which confirms that it was not possible to obtain an EPC on the building/s and to clearly state the reasons why.
This means certain buildings were exempt from the EPC requirements. An EPC assessor should have been able to advise on whether a building was exempt and could issue a letter for the applicant to give to the FIT licensee.
9.4 Tariffs and registration date FITs were reduced over time and the later an installation was registered, the lower the payments it received. There were two types of reductions to the FITs known as ‘degression’.
Default degression was a planned reduction of the FIT from February 2016 to March 2019. This was supposed to reflect decreasing costs of solar panels.
In addition, there was contingent degression which was linked to the cap on the total amount that could be spent on FIT payments implemented in February 2016. The cap was introduced to limit Government spending on FITs. Ofgem reviewed the number of applications and assessed whether the cap would be exceeded. If this was the case, then the tariff would reduce to ensure the cap was not exceeded. If a cap had been reached installations may be put in a queue before they can be registered.
Once an installation was registered and receiving FIT payments, the price was fixed, though it would rise with inflation.
9.5 Registering solar panels There were different registration options for different technologies under the FIT scheme. To register solar PV schemes of 50 kW or less for the FIT scheme, the MCS (microgeneration certification scheme) route needed to be used. In addition to the MCS route, some other
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technologies could also use the ROO-fit accreditation process, but this was not available for solar PV. Customers needed to check both the panels and the installer were MCS certified and the installer should have registered the panels in a database and issued the owner with an MCS certificate.
The owner then needed to send the MCS certificate, an application form, and an EPC to their chosen FIT licensee (the energy supplier). The EPC was required as only homes at band D or above were eligible for the higher tariff rate.
The FIT licensee then cross-referenced, checked eligibility and confirmed the date the customer was eligible for payments from. This was the latter of either, the date the application for FITs was received by the FITs Licensee or the first day of the quarter the installation qualified under. If the installation was affected by a cap then it was put in a queue before it could be added to Ofgem’s register of FIT schemes and payments could be paid.
9.6 Change in regulation 2016 In August 2015, the Government launched a consultation on a review of the FITs. The main focus of the consultation was the cost of the scheme to consumers. The affordability of the scheme was questioned, but the Consultation Response concluded (page 6):
Government has therefore decided to keep the FITs scheme open beyond January 2016. This is only feasible because of the cost control measures introduced as part of this response. New tariffs that provide appropriate rates of return within a capped budget will, Government believes, allow deployment to come forward whilst providing significantly better value for money to bill payers. The scheme will remain under review to ensure it continues to achieve its objectives until generation tariffs end in 2019.
As a result, the FIT for solar PV was reduced from 12.47p per kWh to 4.39p per kWh from 15 January 2016 for installations of 4kW or smaller. Any panel owners who applied for FIT after 15 January 2016 would receive the lower rate, even if the panels had received their MCS certificate before the 15 January 2016.
The Government also introduced a ‘transitionary period’. This meant any panels that were installed and received an MCS certificate before 15 January 2016 had to apply for FIT before the 31 March 2016 or they would not receive any payments. Those that made successful applications in this time period received the lower payment rate. According to the Government response, “this time limit is necessary given the administrative costs and complexity of continuing these transitional arrangements in perpetuity”.3
The deadline for this transitional period was set out in The Feed-in Tariffs (Amendment) Order 2016 on 10 March 2016. The regulations came into force on 31 March 2016.
3 Department of Energy and Climate Change, Review of the Feed-in Tariffs Scheme –
Government Response, 17 December 2015
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Panels installed after 15 January 2016 could apply for FIT as usual (until the scheme’s closure in March 2019) but would have received the lower rate and would fall under the cap which limited the number of panels by setting a maximum generating capacity that could be approved each quarter.
9.7 Closure of the FIT scheme As part of their 2015 feed-in tariff review, the May Government announced that the generation tariff aspect of FITs would close in March 2019.
In July 2018, the Government released a consultation on the future of the scheme, including whether the export tariff should be closed at the same time. In December 2018, the Government released their response to the consultation. This stated that the export tariff would also be closed:
Government has considered the comments and evidence provided and has decided to close the export tariff alongside the generation tariff because the current fixed and flat rate export tariff does not align with the wider government objectives to move towards market-based solutions, cost reflective pricing and the continued drive to minimise support costs on consumers, as set out in the Control for Low Carbon Levies. Nor does the current FIT scheme support the vision set out in the Industrial Strategy and Clean Growth Strategy. This means that the scheme will close in full to new applications after 31 March 2019 subject to the time-limited extensions and grace period detailed in paragraphs 1.18-1.24 below.
However, we note in particular the comments received on the importance of maintaining a route to market for small-scale low-carbon generation after 31 March 2019. We published a call for evidence on the future of small-scale low-carbon generation in the summer and we will follow this up with specific proposals for future arrangements in due course.
A feed-in tariff closure order was laid on 17 December 2018.
The closure of the scheme only impact installations registered after 31 March 2019. Existing installations will continue to be paid as usual.
9.8 SEG proposal Alongside the closure of the export tariff consultation, the Government also released a call for evidence on ‘The future for small-scale low-carbon generation’. This stated:
This call for evidence seeks to identify the challenges and opportunities from small-scale low carbon electricity generation in contributing to government’s objectives for clean, affordable, secure and flexible power. It also seeks information on the role for government and the private sector in overcoming these challenges and realising these opportunities.
The call for evidence ran from 19 July 2018 to 30 August 2018.
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On 8 January, the then Minister for Clean Growth Claire Perry said in response to a parliamentary question that a consultation on the future of export tariffs would be published:
I will be publishing today the next stages of our proposals for a smart export guarantee to reflect two principles: that nobody should be providing energy to the grid for free, or indeed at negative pricing, as has happened in some countries; and that the value of community energy projects, which is real and significant, can be recognised.
Later on 8 January 2019, the Government published a press release on proposals to protect consumers whilst guaranteeing payments for households with solar by unlocking smarter energy system. This proposed a replacement to the export tariff element of FITs, known as a ‘Smart Export Guarantee’ (SEG):
Households and businesses installing new solar panels will be guaranteed payment for power provided back to the grid under government proposals set out today (Tuesday 8 January) to unlock the smart energy systems of the future- an important upgrade to the current Feed-in Tariffs scheme.
The proposed ‘Smart Export Guarantee’ (SEG) would replace the existing ‘Feed-in Tariff’ scheme (FIT), with electricity suppliers paying new small-scale energy producers for excess electricity from homes and businesses being put back into the energy grid. The new scheme could create a whole new market, encouraging suppliers to competitively bid for this electricity, giving exporters the best market price while providing the local grid with more clean, green energy, unlocking greater choice and control for solar households over buying and selling their electricity.
With the cost of solar falling by 80% since 2008, it’s the right time to review the way these payments are made- with the scheme currently costing consumers approximately £1.2 billion a year. The SEG would mean households and businesses installing new renewable energy generators would be paid transparently for the energy they produce- protecting consumers from cost burdens, by using established smart technology.
Alongside the press release, the Government published a consultation on the proposals and an impact assessment. The consultation closed on 5 March. The Government published the response to the consultation in June 2019, confirming that the Government would implement the new Smart Export Guarantee (Section 1).
BRIEFING PAPER Number 8090 7 February 2020
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