British FiT Waxes as Germany’s Wanes

Unless some massive prank is being played on the solar industry, April 1st will kick off enormous changes in Europe (though solar stocks have already begun to react): Germany’s feed in tariff will scale back by 16-17 percent, while the United Kingdom will enact a FiT for the first time.

Germany’s FiT rate for rooftop and “free field” systems will be reduced 15 percent, while payments for solar panel installations on farmland or otherwise more valuable land will be reduced 25 percent (according to PV Magazine and PV Tech). Rates will also scale back further as new solar capacity goals are met (from the current 3 gigawatts per year to 3.5, then to 4.5).

In the United Kingdom, meanwhile, solar PV systems of all sizes–including home solar installations–will be eligible for generous FiT payments whose levels have been set for the next three years. The Department for Energy and Climate Change (DECC) said today that the”UK currently gets around 5.5% of electricity from renewable sources and that will need to increase to around 30% to meet the 15% 2020 [RPS] target” (DECC).

Just how incentivizing are these incentives? The British FiT is calculated to offer a return on investment of 5-8 percent across sectors. This has left some analysts a little cool on the plan, who think more attractive returns would encourage better participation in the program–and thus, higher levels of installed renewable generation capacity.

Still, owners of solar electric systems won’t be complaining. Systems that generate up to 5 MW will even be compensated for any energy consumed on site, and extra for what they may feed back into the grid. The DECC predicts that the typical homeowner could earn £900 in addition to a £140 yearly electric bill reduction, all from a 2.5 kw solar panel array. And a nice touch for forward-thinkers of the last year: systems commissioned since July 2008 (when this program was first announced) are eligible.

First-year rates for PV run from 29.3-41.3 pence/kWh.