Beware rush to install solar panels before subsidies cut

Poor financial deals or bad workmanship among risks as feed-in tariff is due to be slashed, say experts

TENS of thousands of households are scrambling to put solar panels on their roofs before lucrative subsidies are cut, official statistics suggest, amid warnings that the “mad rush” could leave consumers worse off.

Ministers announced in late August that they planned to slash rooftop solar subsidies by almost 90 per cent from the new year, as they seek to rein in green energy costs.

Experts say the move will mean installing rooftop panels – which can currently make a £7,000 profit over 20 years – will no longer be viable for most households.

Solar panel installations under the “feed-in tariff ” (FiT) subsidy scheme hit a three-year high of 18,346 in September, up 59 per cent on August, statistics from the Department of Energy and Climate Change (DECC) show.

Most of the installations are believed to be domestic rooftop panels, although the FiT scheme is also used to subsidise commercial rooftop projects and small solar farms.

The surge in installations is expected to continue to December, with the Solar Trade Association reporting “a very significant rise in demand” among its installer members. Rooftop panels can be installed in as little as half a day.

But Virginia Graham, chief executive of the Renewable Energy Consumer Code, the industry code of conduct body, warned the “panic” to qualify for the payments risked households signing up for deals with hidden catches, or falling foul of traders carrying out shoddy or overpriced work. She said a “mad rush” for subsidies when they were last cut, in 2011-12, resulted in “a very high number of complaints because people got their fingers burnt”.

She said some households had failed to carry out proper checks before sign- ing up. “They had paid over the odds; in some cases they didn’t even have an installation – they paid the deposit and [the company] couldn’t get the installations completed in time; other times the installations can be substandard because people are just rushing to get it all done,” she said.

Under the FiT scheme, households that install panels are paid “generation tariffs” for the electricity they are estimated to use and “export tariffs” for the surplus electricity they are estimated to sell to the grid. They can also expect to save on their energy bills by avoiding buying electricity.

A typical solar system costs about £6,250, according to The Eco Experts, a solar price comparison website. Currently, a household’s combined subsidy earnings and savings could come to £673 a year, meaning it recoups the cost of the panels in just un- der 10 years and could make a £7,210 profit after 20 years – the duration of the subsidies.

But if the generation tariff is slashed by 87 per cent, as proposed, combined earnings and savings would fall to £266 a year, meaning even after 20 years a household would not have recouped the installation cost. It would take a further seven years of bill savings to make a return on the investment, The Eco Experts estimates.

Some solar companies offer households “free” panels – where the company pays the installation cost and takes the subsidy payments, leaving the household to benefit only from the energy bill savings.

A DECC spokesman said: “Government has engaged extensively with industry and the public via the feed-in tariff consultation. We are working closely with industry to ensure installations are made to the highest of standards.”

‘They paid over the odds; in some cases [the company] couldn’t get the installations completed in time’