On Thursday the Government finally made a move to end the current uncertainty over the feed-in tariff for Solar PV and announced it would bring forward legislation to ensure the rate reductions they had previously announced would come into effect on the 3rd March, irrespective of the outcome of the on-going court case.

This has removed a lot of uncertainty as there are now only two realistic scenarios to consider;
If the Government looses the court case the previous rates (43p for < 4kW systems) will apply for installations completed prior to 3rd March.

If the Government wins the court case the new rates (21p for < 4kW systems) will apply to all installations from the 12th December 2011 onwards.

The outcome of the court case is not expected for a few weeks and it is very clear that the Government is going to fight it all the way, so there is no certainty there will be a final result before 3rd March, when at least as far as new installations go, it becomes irrelevant anyway.

DECCs assumptions on the cost of a domestic solar PV system are very out of date at ?9,648 for a 2.6kWp installation, making their assumed rate of return of 4.5% much lower than a typical consumer could expect to achieve, with 7% – 8% being more realistic and the new rate of 21p will of course be index linked as of the 1st April 2012 and so is expected to become 22p based on the current rate of inflation. This rate of return is still very attractive for domestic homeowners and installations have averaged 850 per week in the first 2 weeks of 2012, a figure which seems set to rise considerably week on week.

DECC has published a very good summary of the current situation on its website

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