PG::Error: ERROR: new encoding (UTF8) is incompatible

  1. First, we need to drop template1. Templates can't be dropped, so we first modify it so t's an ordinary database:
    UPDATE pg_database SET datistemplate = FALSE WHERE datname = 'template1';
  2. Now we can drop it:
    DROP DATABASE template1;
  3. Now its time to create database from template0, with a new default encoding:
    CREATE DATABASE template1 WITH TEMPLATE = template0 ENCODING = 'UNICODE';
  4. Now modify template1 so it's actually a template:
    UPDATE pg_database SET datistemplate = TRUE WHERE datname = 'template1';
  5. Now switch to template1 and VACUUM FREEZE the template:
    \c template1
    VACUUM FREEZE;
Problem should be resolved.

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