What Feed-In Tariffs Mean for Solar in Ireland

Guest Article by Phil Teare, founder of PureVolt.

2022 sees the long-awaited rollout of feed-in tariffs in Ireland. At long last, homes with solar panels will get paid for the excess electricity they send back to the grid. This seismic change in the solar panel industry has been touted as a game changer. We have been looking into the numbers to see if the claims stack up.

What Feed-In Tariffs Mean for Solar in Ireland

Most people with solar panels on their homes will produce more electricity than they can use during the summer months. Before 2022, this excess electricity was just given back to the grid for free. In the days of continually rising energy prices, this need to give it away for free has not been popular.

The government introduced legislation to force all utility companies to start paying homeowners for the electricity they give to the grid. Officially, this is called the Clean Export Guarantee (CEG) tariff.

This extra enticement for more people to get solar is all part of the government’s push to get more clean electricity onto the grid as part of Ireland’s net-zero commitments.

How much difference do feed-in tariffs make?

In short, a lot – 21% better payback is a typical figure from our calculations.

Let’s take a 3-bed house in Ireland with 4.1 kWh of solar panels. The payback period – the time it takes the solar panels to ultimately pay for themselves – is 6 years 10 months, which is about typical. The feed-in tariff reduces this payback period by 14 months, to just 5 years 8 months. And over the 25-year lifespan of the solar panels, that same homeowner will end up with over €6000 more in their back pocket.

Getting the payback period to within the five-year ballpark has been considered a holy grail of solar, suddenly opening up solar panels as a choice for more and more homeowners.

The utility company question

Each utility company has been given the power to set its own rates, as long as those rates pass the “at the market rate” test.

SSE Airtricity are offering 14 cent/unit, and Pinergy 13.5 cents/unit. None of the other major utility companies have announced their rates as yet (July 2022).

Many utility companies have been dragging their heels on the topic, whilst some have reportedly been engaging with the CRU (Commission for Regulation of Utilities) to see just how low they are allowed to set the rates to still pass the “at the market rate” test their offerings have to meet.

It looks like most companies will be coming in at between 25% and 50% of the price at which you buy electricity. We are hearing some companies considering rates around 8 cents kWh, and some have even been looking at paying nothing at all.

Only time will tell if homes with solar panels start voting with their feet and changing suppliers to chase the best feed-in tariffs. It will be interesting to see where the dust settles, whilst some companies will be paying almost double the rate of others.

The end of solar storage batteries?

One interesting consequence is for solar storage batteries. Once a popular add-on to solar panel installations, their return on investment has been declining over recent years.

2020 saw the removal of the grant payment toward solar storage batteries. The grants are now all towards solar panels only.

Still, batteries had a good economic argument when you were giving away electricity for free, just to buy back the power later that same day at the full rate. But now you get paid for electricity, the financial argument for batteries is diminished.

A solar storage battery add-on, that might have had a payback in 6 to 7 years beforehand, now might take 12 to 14 years to pay for itself. And considering an average battery has a lifespan of 10 to 12 years, the economics are suddenly stacked against battery storage systems.

Batteries also add a lot to the upfront costs for the homeowner too. You not only need to buy the battery itself, but you need a more expensive inverter (the device that connects your panels and battery to your home’s electrics). Then there is the extra racking and wiring too, all adding to the cost.

All in all, that 3 bed homeowner above would have forked out about €8,500.00 for the system that includes a 5kWh battery. If the battery is no longer required, then that drops to €5,800.00, a whopping €2,700 saving. This again moves solar into the realm of affordability for a larger swath of homes in Ireland.

Time will only tell if this push against batteries is a conscious choice by the government or an unintended side effect.

A great idea, still awaiting great implementation

There’s no doubt that introducing feed-in tariffs is an excellent thing for solar and Ireland. Bringing the payback for solar into the five-year window, and reducing the upfront costs required to get solar, is a winning combination.

The difficult rollout has been its Achilles heel though. The official start date was the 15th of February. Yet, the majority of utility companies have not even announced the rates, let alone made an actual payment. We are told all homes with solar panels will get payments backdated to the 15th of February when systems are finally up and in place.

When the implementation gets sorted, we will finally start to see its benefits and what influence it has on the solar panel market of Ireland. Either way, it’s good news for the solar industry and Ireland’s net-zero target.

Phil Teare is an entrepreneur, former engineer and self-confessed eco nerd. He’s also the founder of PureVolt Solar, a company he set up with the aim of getting solar panels onto every roof in Ireland by providing the clearest and most honest information on the internet. When he’s not running companies, he spends his time reading and writing on eco topics, and occasionally builds his own DIY solar panels too. Learn more about Phil and PureVolar Solar at PureVolt.ie