As the rates electricity companies pay for power from rooftop solar panels fall, homeowners shrug

Energia announced to customers last week that it was reducing the rates it pays people with rooftop solar panels who generate more electricity than they need and feed it back into the grid.

The energy company joins Electric Ireland, which in November announced it would cut its feed-in tariff, the Independent reported at that time.

The government does not set the amount electric companies have to pay households that generate electricity and feed it back into the grid, which it calls the Clean Export Guarantee (CEG), instead letting companies decide for themselves what they will pay.

Companies buy electricity from these micro-generators, and the wholesale market, at lower prices, and then sell it on at a higher price.

“With the final rate of electricity charged to customers inclusive of network and transportational charges, as well as the energy companies’ own operational costs,” says a spokesperson for the Department of Environment, Climate and Communications.

As wholesale electricity prices – and prices electricity companies charge their customers – have been falling in recent months, it is not surprising the companies are reducing what they’re paying micro-generators for electricity too, said Irish Solar Energy Association CEO Conal Bolger on Tuesday.

However, while these cuts could lengthen how long it takes for rooftop solar to pay for itself, it’s unlikely to change the minds of people who were planning to install arrays on their roofs, say several Dubliners who have done so, or are considering doing so.

In Ireland, 35,603 permanent private households had solar panels generating electricity, according to the 2022 census. That includes 2,299 in Dublin city, and 3,922 in Fingal. Larger numbers have solar panels producing hot water.

Were feed-in tariffs a factor?

For someone deciding whether to buy solar panels for their roof, the biggest factor is the upfront cost, says Bolger, of the Irish Solar Energy Association.

“For most homeowners, you know, when they’re making this decision, you don’t know what the power prices are going to be for the next period of time,” he said.

Indeed, when Darragh Rogan was making the decision, “I didn’t factor the feed-in tariffs into my calculations, I was just discounting that as a possibility so it was a bonus in my mind,” he said.

After all, the cost of the install will run well into the thousands, depending on the provider and number of panels and whether or not a battery is included in the system.

But the differences in feed-in tariffs that electricity companies pay will be in the cents per kilowatt hour (kwh).

When Electric Ireland dropped its rate, it was from 21c/kWh to 18.5c/kWh. And Energia’s has gone down from 24c/kWh to 20c/KWh.

Stephanie Francis said she’s in the process of talking to providers about buying solar panels for her roof, but the feed-in tariffs weren’t top of mind.

“Today I had the first visit from a solar PV company,” she said in an email Monday. “Until today, I hadn’t actually looked at what rates I would get selling excess back to the grid.”

Similarly, Neil Delaney, who lives in Carpenterstown, said he did a huge amount of research into whether to buy solar panels, and then what kind of set-up he’d get – and then it took a while to get them installed.

It was only after that that he started to have a look at the feed-in tariffs he could get. “Once that was done I went to explore the rates I could get from the market,” he said.

Christine Dibelius, too, said she wasn’t too worried about feed-in tariffs.

“The exact rate of payment for excess energy I feed into the grid was not a factor in my decision to install them,” she said. “I got mine in 2022 before the credit system was even fully operational.”

The big benefit – real or expected – that solar panel owners and buyers cited were a reduction in how much grid electricity they use, and the fall in their electric bill and carbon emissions that would bring.

If they have a little extra solar power and that goes back to the grid, and they get a few cents back in exchange, all the better, a few said.

“I’m less pissed off at the energy companies” for cutting feed-in tariffs, “because they are providing a service by getting rid of my excess – that’s a societal service”, says Rogan.

Instead of being wasted, his excess solar power helps decarbonise the grid, he says.

In seeing the feed-in tariff payments as a tertiary consideration, or a bonus, these solar panel owners and buyers seem to be taking the attitude the Department of Environment, Climate and Communications recommends.

The department spokesperson said that “primary advantage of microgeneration is self-consumption of your own electricity”.

“While there is potential for payment for any excess electricity that you might not use yourself,” she said, “export is an additional benefit but not the primary driver for engaging in microgeneration”.

Boosting batteries?

However, as feed-in tariffs fall, the economics of solar systems will change, in a way, says Colm Brennan, who lives in Knocklyon and has rooftop solar.

“If the rate of sale goes down, it’s going to make the battery a lot more appealing,” Brennan says.

If solar panels alone cost thousands, buying a battery or batteries to sop up any excess power they generate when the sun is shining, to be used when it’s not, costs thousands on top of that.

So, many Dubliners who’ve bought panels have opted to go without batteries. Including Brennan, who got his panels in January.

As well as Rogan, who calculated that the panels alone would pay for themselves in seven years – but panels plus a battery would take 17 years to pay off.

But as the pay-off of selling excess solar to the power company falls, the benefits of keeping it and using it could rise. Maybe even enough to justify a battery.

Batteries have other benefits too, if used in combination with a smart meter tariff, says Delaney, who has both panels and a battery.

His plan means he can get electricity [from the grid] at 4c/kWh between 2am and 4am, Delaney says. So he fills up the batteries then. By contrast, power costs him 37c/kWh at the peak period from 5pm to 7pm.

Grant reductions

A bigger worry than the falling feed-in tariffs is the government’s plan to reduce the size of the grants it’ll pay to help homeowners cover the costs of buying rooftop solar arrays, said Bolger, the CEO of the Irish Solar Energy Association.

From 1 January, the Sustainable Energy Authority of Ireland (SEAI) plans to reduce the maximum grant it gives for photovoltaic solar panel installations from €2,100 to €1,800.

Since the upfront cost is such a big factor, this could have a real impact, Bolger said.

Francis, who just had her first visit from a solar PV company, as she looks at buying solar panels for her roof, says it already has

“My main motivations for installing solar PV are the back of the house is south-facing, I work and study mostly from home, my partner is moving in (bills going up!) and I want to take action in reducing my reliance on non-renewable energy sources,” she said.

“My secondary motivation is that the SEAI grant for solar PV panels is reducing as of January 1st, 2025 and people in the industry are confident grants will continue to drop year on year,” she said.