Isra-Mart srl: Solar subsidy fiasco sparks panic buying

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Homeowners and businesses have started panic buying solar photovoltaic (PV) panels, following the announcement of the government's controversial plans to dramatically cut feed-in tariff incentives for projects registered after 11 December.

Leading PV installer EvoEnergy said that it is getting hundreds of calls from people desperate to beat the December deadline. Inquiries reached 400 a day between Monday and Wednesday, a four-fold increase on the usual 100 inquiries a day.

The boom was sparked by the launch of a Department of Energy and Climate Change (DECC) consultation on Monday proposing that anticipated cuts to subsidies for solar power will take effect from 12 December, instead of the expected 1 April 2012 date.

Under DECC's plans, anyone who registers a PV installation smaller than 4kW after midnight on 11 December will initially receive the current higher feed-in tariff rate of 43p per kWh, but the incentive will then drop to 21p per kWh from 1 April.

The phased introduction of the reduced feed-in tariff rate appears to be tailored to allow the government to introduce the changes early, even though the official consultation on the new tariffs will not end until 23 December. The timeline means that installations completed after 12 December could be assigned different rates post-April 2012 depending on the results of the consultation.

However, anyone who registers PV panels before 12 December is guaranteed the current 43p per kWh rate for the 25-year life of the feed-in tariff scheme.

Kevin Hard, chief executive of EvoEnergy, said that orders have been flooding in since the announcement on Monday, adding that some people are buying panels immediately in an attempt to meet the December deadline.

"What's most striking about the calls is that people are ringing up ready to buy there and then," he said. "In the past it's been a process that's taken a few weeks as people think over the decision. We think they should still do that."

A spokesman for EvoEnergy told BusinessGreen it is "highly unlikely" that anyone installing on 11 December will be able to get approval in time for the higher feed-in tariff rate, and the company plans to issue a suggested cut off date for new orders shortly.

EvoEnergy also said that its order books are now full right up to the deadline, and that the company is now booking orders for after 11 December. EvoEnergy is advising people not to "panic-buy", arguing that solar PV will remain commercially viable if the new rates are confirmed.

If brought into effect, the new tariffs will reduce the rates of return for solar installations from current levels that have in some cases topped 10 per cent to just 4.5 to five per cent.

The government maintains that the new rates of return will still prove attractive as they exceed the returns available from many other savings options. However, the industry has warned that they are too low to attract private finance and that free solar and social housing schemes will be closed as a result.

The reported surge in demand will provide ammunition for the government's argument that rapid cuts to incentives are necessary to stop a 'gold rush' that would push the feed-in tariff scheme over budget.

However, while some firms are seeing a rush of interest in new installations, others are seeing a more muted response from customers. A number of councils and businesses have also confirmed that they are cancelling projects that cannot be completed before the 12 December cut off.

A spokeswoman from Homesun, another leading installer, told BusinessGreen that enquires have been stable, but that the company is receiving calls from "angry and confused" existing customers concerned by the cuts.

She warned that solar installers will see a large drop in demand from next month because the new rates almost double the payback period for solar installations to 20 years.

"The thing about solar is that you attach it to your house, so it's difficult to compare to other kinds of financial investments such as ISAs," she said.

"The median length of time people stay in a house is eight years, but if you ask them how long they think they will stay, it's five. You can't even pay back before you move house. The only people who will want solar panels now are the wealthy who have £10,000 to spare."

The spokeswoman added that Homesun has earmarked 5 December as the cut off installation date for anyone seeking to secure the current higher feed-in tariff.

Meanwhile, The Guardian reported yesterday that a host of solar projects are now facing the axe, including proposed installations by the RSPB, Norwich Council, Morecambe Bay Community Renewables and South Yorkshire Housing Association.