The announcement puts to bed weeks and weeks of speculation and rumour that has been surrounding the solar scheme, with the Government hoping the reforms will help to deliver growth within a once booming industry.

The latest round of cuts were due to be introduced from 1 July however the Department of Energy and Climate Change (DECC) last week announced plans to extend the current FiT rates for one more month. Therefore end users looking to install small-scale solar PV systems have more time to benefit from the higher tariff levels before the reduction comes into force.

But it’s not just tariff levels changing. DECC has confirmed a few other ‘tweaks’ including:

• The scheme’s lifetime will be reduced from 25 years down to 20 years for new solar PV installations.

• FiTs will be frozen or reduced every three months, depending on the amount of solar installations in the preceding quarter.

• The export tariff will go up from 3.2p/kWh to 4.5p/kWh.

“The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms provide a strong, sustainable foundation for growth for the solar sector,” said Greg Barker, Energy and Climate Change Minister.

“UK solar continues to be an attractive proposition for many consumers considering microgeneration technologies and that having placed the subsidy support for this technology on a long-term, sustainable footing, industry can plan for growth with confidence,” he added.

The RHPP is the forerunner to the Renewable Heat Incentive (RHI). Extending the scheme will allow more people the opportunity to benefit from renewable heating technologies, such as heat pumps, solar water heating and biomass boilers.

The RHPP was originally launched last July, with £15 million worth of funding set aside. With phase two the pot has been increased by an extra £10 million, making £25 million available through a voucher scheme.

The second phase is also offering social landlords and communities the chance to compete for funding pots of £10 million and £8 million respectively. The grants are designed to encourage people to make the switch to renewable heating.

The Energy Saving Trust is administering the RHPP voucher scheme and to be eligible certain criteria has to be met. Grants offer one-off payments to help cover the costs of the renewable heating technologies and are available as follows:

• £1250 for a ground source heat pump
• £950 towards a biomass boiler
• £850 towards the cost of an air source heat pump
• £300 for a solar thermal system

Homes have to be without mains gas heating to be eligible for the vouchers, however in the case of solar thermal panels it is immaterial what method of heating homeowners utilise.

Commenting on the soon-to-be-launched new RHPP, Climate Change Minister Greg Barker said: “The new Renewable Heat Premium Payment scheme will be bigger and better than the original.

“We’re increasing the budget from £15m to £25m, for the first time we’re including community schemes and there’ll be more social housing schemes that can benefit. Those people who are reliant on expensive oil or electric heating should consider applying to the Premium Payment scheme to cut their fuel bills in the long term.”

The new RHPP voucher scheme opens for pre-registrations on 2nd April before officially launching on 1st May. Further information about how applications can be made for the social housing and communities competitions will be revealed at a later date.

While it’s certainly a positive move that the RHPP voucher scheme has been extended and more money made available, it’s not all good news. The RHI was due to go completely live this Autumn, but that launch has been pushed back to the summer of 2013.

To ensure the success of the scheme long-term, the Department of Energy and Climate Change (DECC) has said that a formal consultation will be launched in the summer, to look at different policy options. The biggest concern is that the scheme doesn’t go over budget, and one suggest could be to implement a system which would lower tariffs as the scheme grows.

“Putting in place cost control measures for the Renewable Heat Incentive is the prudent thing to do, given this is millions of pounds of taxpayers’ money at stake and taking on board the lessons learned from the feed-in tariff scheme,” Barker added.

The full details of the Government’s low carbon heat plans can be viewed by visiting www.dec.gov.uk

Towards the end of last year, the High Court ruled that the way in much the Government went about its decision to slash solar subsidies by more than half was essentially unlawful and not motivated by a properly conducted consultation. The ruling was a victory for the solar industry, with two heavy-weights in the solar game joining forces with Friends of the Earth to challenge the Government’s proposals.

But the Government continued to argue that cuts to the feed-in tariff scheme for solar PV was necessary, a move they deemed would in fact save the industry in the long run. The feed-in tariff has been cut from its original 43.3p/kWh to 21p/kWh and ministers backed up their argument by saying that due to the cost of solar PV panels falling, less money should be spent on the tariffs. Arguing their case, the solar industry hit back by saying that the decision to suddenly slash solar FiTs had the potential to destroy one of  the UK’s few areas of economic growth.

The new year kicked off with the Government pledging to continue the fight in the Supreme Court. However, given that they have just been denied permission to appeal the decision, the British Government has finally thrown down the towel and declared defeat, promising to draw a line under the whole solar FiTs fiasco.

“We will now focus all our efforts on ensuring the future stability and cost-effectiveness of solar and other microgeneration technologies for the many, not the few,” commented Ed Davey, the Energy and Climate Change Secretary.

On 21 December a challenge from the solar industry – instigated by Solarcentury and Homesun, together with Friends of the Earth – was victorious, with a judge ruling in their favour.

It was ruled that the Government acted unlawfully in handling its proposals to slash solar subsidies from the current rate of 43.3p per kilowatt hour of electricity generated, to just 21p and imposing a 12 December deadline for the new rate to apply.

The consequences of the High Court ruling upholding the challenge means that anyone registering for the feed-in tariff (FiT) scheme between now and the end of March 2012 is, by law, entitled to receive the current 43.3p rate for the full 25 years.

Despite the court ruling, the Government made very clear that it would stand by its proposals and subsequently the Department of Energy and Climate Change (DECC) announced that it would be lodging an appeal.

Yesterday (Wednesday) the Government launched an appeal with the Court of Appeal.

“We hope that permission will be granted for an appeal and that we can secure a hearing as soon as possible so that we can provide clarity for consumers and industry on the way forward following the consultation,” said a DECC spokesperson.

The Government’s main argument is that the 12 December deadline is essential and the tariff needs to be reduced to ensure the long term future for solar in the UK.

While the solar industry has recently been left reeling after the Government announced its proposals to slash solar subsidies by more than half, Solar Guide is optimistic that the once booming market will be able to weather the storm surrounding cuts to the feed-in tariff (Fit) scheme. Thanks, not least, because of a reduction in the price of the technology.

Solar Guide’s research indicates that solar PV prices have reduced over the last 12 months, which is helping to make solar far more affordable and should go a long way when it comes to maintaining faith in the renewable technology.

Figures show that the average price per kWp of a solar PV system has dropped by 28%. According to figures compiled by Solar Guide, in December 2010 the average price consumers could expect to pay for a solar PV installation was £4,445.95 per kWp. In October 2011, that price dropped by 27.87%, to £3,206.96.*

With the cost of fossil fuels continuing to rise rapidly, investing in a solar PV system makes sense, not least because:

• The cost of installing the technology has reduced by 28%
• The same sized system installed this time last year, compared to now, would be 39% more expensive.
• You’ll be able to enjoy cheap or free electricity.
• Solar PV is good for the environment.
• You can make money by generating your own electricity through the feed-in tariff.

“Solar subsidies from the feed-in tariff have made investing in solar panels economically viable for so many people,” said David Holmes, founder of Solar Guide.

“While the Government’s proposal to slash solar subsidies by more than 50% has hit the industry hard, the fact that we’ve seen solar PV prices dropping by as much as 28% should provide the industry with a much needed boost.

“Our figures really do speak for themselves. This time last year, installing the same sized system would cost you 39% more than it would if you were installing it now.

“So while fossil fuel costs are rising solar PV prices are falling. Which means solar is fast becoming more and more affordable. And that’s good news, not just for energy consumers but for the economy and the planet, too. So it’s a win-win situation all round.”

*Figures based on 256,776 online quotations from December 2010 to November 2011. Data sampled at 28 November 2011.

With the Department of Energy and Climate Change (DECC) set to impose the cuts to the solar feed-in tariff (Fit) scheme from 12 December, according to the Guardian, many Lib Dem councillors are being urged to push for a postponement over fears of imminent job cuts due to the deadline.

DECC continues to face a backlash from the solar industry, with installers venting their anger over the Government’s decision to slash subsidies so dramatically. With Liberal Democrat councillors preparing to add their voices to the revolt, there seems no end to the solar shambles saga.

According to a document by a group within the Local Government Association (LGA) – which has been seen by the Guardian – bringing in the cuts at such short notice isn’t good governance and bad for business planning. They are calling for the deadline to be extended to “the end of the financial year, as originally promised.”

The group goes on to say that the last general election was fought on getting more green jobs, and thanks to the feed-in tariff – which was giving growth to a new industry – more jobs were being created. In short, the cuts goes against everything they believe in and is a betrayal of their core values.

The Government has set the feed-in tariff budget at £860 million and maintains that the cuts are necessary in order to keep within the set budget.

Last week the solar PV industry was forced to face the inevitable – that the Government was to slash the rates of solar subsidies. However, the industry has been shocked by the level to which they have been cut – by over 50%.

From 12 December, for generating electricity from a solar PV system, the rate is set to be dropped to 21p per kilowatt hour, down from the current rate of 43.3p per kilowatt hour, to just 21p.

However, whilst the solar industry and investors remain up in arms about the Government’s plans to introduce subsidy cuts, Worcester, Bosch says the announcement isn’t all doom and gloom and the cuts to the feed-in tariff (Fit) rates could in fact give a welcome boost to sales of solar water heating systems.

Neil Schofield, the firm’s Head of External and Governmental Affairs says the reduction could end up having “a positive effect on solar thermal sales which remain a very viable and cost-effective option for householders to reduce their energy bills.”

“What’s more the decision to link the tariff to the energy performance rating of a property will ensure that public money is not being wasted on properties which are inadequately insulated and you can’t argue with that,” he added, reaping praise on the proposals which include properties having to achieve an Energy Performance Certificate (EPC) rating of Level C and above.

According to Solar Trade Association figures, while solar PV remains increasingly popular, last year their members have reported a reduction of 75% or more in their solar thermal sales, helped not least by uncertainty over the Renewable Heat Incentive (RHI) scheme and the success of the feed-in tariff.

This morning the Department of Energy and Climate Change (DECC) issued an official press statement and the news, although not unexpected, has set the solar industry in a bit of a spin.

Although the proposals are subject to the usual consultation, as part of the successful feed-in tariff (Fit) scheme that was introduced in April 2010, a new tariff is set to be introduced, which will see solar PV systems paid 21p for every Kilowatt hour of electricity they generate.

These new levels will apply to all new solar PV systems that are fitted on or after 12 December 2011. Although they will still be eligible to receive the current tariff rates up until 1 April 2012, the new lower rates will kick into force from then onwards.

Apparently, to prevent a boom and bust scenario from occurring in the solar industry, introducing lower tariff levels is an essential move in order to keep the feed-in tariff budget under control.  According to Energy Minister Greg Barker, the new tariff levels will help put the solar industry on a “steadier and sustainable growth path.”

Barker said that it was a priority to put solar on a firm footing, which would ensure prosperity in the industry.

“Although I fully realise that adjusting to the new lower tariffs will be a big challenge for many firms, it won’t come as a surprise to many in the solar industry who’ve themselves acknowledged the big fall in costs and the big increase in their rate of return over the past year,” he said.

The official statement can be read in its entirety by visiting the Department of Energy and Climate Change website.

Earlier today, the Energy Saving Trust (EST) accidentally published online a document which revealed the level of cuts the Government intends to make to solar subsidies. Currently set at 43.3p per kilowatt hour, that figure will be slashed to 21p.

Although the EST has since put out a press statement which stresses that the proposals remain under consultation, but given that rumours have been flying around the media for days, purporting to cuts ranging from 20p to 9p, the damage is clearly already done.

Due to continued speculation in the media, the solar industry has been trying to brace itself for some inevitable changes. However, insiders say that although larger solar companies will be able to weather the change, such drastic cuts to the feed-in tariff (Fit) scheme will be crippling for smaller solar firms.

Speaking to the Guardian, Howard Johns, MD of Southern Solar said: “If they go ahead with this, the tariff is way too low, and all the social housing and free solar schemes – which make the feed-in tariffs exciting in terms of fuel poverty – will be destroyed.”

So severe are the proposed cuts, it will almost certainly hit community projects the hardest. And schemes which provide cheap electricity to low-income homes look certain to be scrapped.

“In the residential sector, providers of free solar panels are around 50% of installations and they will disappear at anything less than 28p per kWh,” said Daniel Green of HomeSun, who fit solar PV panels for free to benefit from the feed-in tariff subsidies.

“This means the less well-off will not be able to benefit from solar,” he added.

Full proposals are set to be announced in Parliament on Monday.

Since its launch in April 2010, the scheme has resulted in excess of 70,000 solar panel installations in the UK, creating thousands of jobs from salespeople to installers. And if the Government maintains the feed-in tariff at its present rate when it comes to review the incentive scheme, more than 10,000 jobs will have been created by next spring, it will result in the generation of another 50,000 jobs by 2015.

Engensa CEO, Toby Darbyshire said supporting the feed-in tariff was a “no-brainer for economic growth and a healthy future.”

“Threats to slash the feed-in tariff by more than 25% would suffocate this blossoming industry and cost the UK government untold billions in unemployment insurance, increased fuel poverty subsidies and the consequences of an aging energy infrastructure,” he added.

The Government is due to launch a review of the scheme in early 2012, and Mr Darbyshire says they need to shy away from cutting the feed-in tariff rates too severely. Specifically, according to Engensa’s recent analysis, if the Government was to implement cuts in excess of 25% it would have a significant negative impact on the solar industry.