The latest changes to the Feed-in Tariff scheme for solar pv, now effective from 1 August, have been unveiled by the Government, following consultation with industry and consumers.

The tariff for a small domestic solar installation will be 16p per kilowatt hour, reduced from 21p, and will be set to decrease on a three-month basis thereafter, with pauses if the market slows down. All tariffs will still be index-linked in line with the Retail Price Index (RPI), while the export tariff will be increased from 3.2p to 4.5p.

The Department of Energy and Climate Change (DECC) says the new tariffs should give a return on investment of more than 6% for most typical, well-sited installations, and up to 8% for the larger bands.

Other changes announced include an increase in the multi installation tariff to 90% of the standard tariff and a reduction in the scheme lifetime from 25 to 20 years for new solar installations.

Energy and climate change minister, Greg Barker, said: "Today [25 May] starts a new and exciting chapter for the solar industry. The sector has been through a difficult time, adjusting to the reality of sharply falling costs, but the reforms we are introducing today provide a strong, sustainable foundation for growth for the solar sector."

Alan Aldridge, chairman of the Solar Trade Association (STA) said: "We broadly welcome many of the Government's decisions for how solar pv will be treated in the FITs scheme and wholeheartedly welcome the inclusion of solar in DECC's updated renewable Roadmap; this should reassure consumers and solar companies alike that the Government recognises and stands behind a major role for the solar industry."

However, David Hunt, director at renewable energy firm Eco Environments, commented: "While the return on investment remains attractive at around 6%, by reducing the FIT lifetime by five years consumers will earn approximately £20,000 less than they would have done if the 25 year term had been left in place. This is the sting in the tail that the industry and the consumer could have done without at a time when the market remains extremely fragile."

For more information visit www.decc.gov.uk