Feed-in tariffs – companies must stop profiting at our expense

Tim Yeo MP today said on radio 4 that the whole issue of higher fuel bills has shown a good case for opening up the books of the energy companies, so that we can all see just how much they are really paying for energy.
I understand that businesses will want to protect their interests, but every house in the country has to use an energy service/product, it should be open and accountable.
This ties in with your post here, are we really only paying £8.50 per month to subsidise this scheme?
Until I read this post I wasn’t even aware I was subsidising it.

Why is this information not included on my energy statements?

Hello,

I feel like one of the losers of the FIT scheme having installed 2 wind turbines in June, 2009. I receive 9 pence per unit produced compared with more like 27 pence per unit had I installed the turbines 1 month later.
Both the Conservatives and lib dems stated before the election that ‘early’ adopters of renewable energy would receive the same tariff as later adopters. The coalition reneged on this about 6 months after taking power.
Had I known 2 years ago the amount of red tape, changes of policy, etc. that goes on I would not have installed alternative energy as just too much hastle. I received my first FIT payment last week, 15 months after submitting my returns, the holdup being entirely due to OFGEM’s inefficiency or inability to cope.

As an aside you mention in your article above that money is earned for export to the grid. Far more payment is made for every unit of electricity generated whether exported or not.

Are the energy companies really directly or indirectly investing the profits (which they reap from us) in the FITS scheme?

If this is the case then we are being scammed twice for the energy we are obliged to pay such a high price for and which we, the average consumers, can only obtain from them.

Absolutely disgusting!

These kinds of proposals for feed-in are no use for ordinary people who live in small houses or flats. How about letting us club together to buy shares in generators/solar arrays/heat pumps etc, then get some rebate on our bills for the feed-in? Oh, isn’t that a bit like publicly-owned electricity supply (which we used to have?)

The FIT scheme is a poorly adapted copy of a very successful scheme which has been operating in Germany for almost a decade. The German scheme looks at how mature (cost effective) each type of renewable electricity gereration is and sets the tarrif to support the less mature technologies, ie PV pannels. So the tarriff for windfarms is set low relative to PV i think in the region of 1/7.

One of the fundamentasl diffrences between the German and UK systems, is that the tarrif is very simple in Germany .The German Government REQUIRED the electricity generators to enter into 25 year contracts (the expected working life span of a wind turbine or PV pannel) with the provider of the micro renewable electricity provider (householder ). The upfront funding of the microrenable instalation comes from banks as a loan based on a guarenteed income from the electricity sold.

Thus i am concered that the UK Government is changing the tarriffs on renewable energy. My concern is not regarding the impact on solar farms, but that the government did not think out the impacts of the FIT scheme on the UK power generation market, before implementing it.!

Having spent A LOT of money installing 20 panels on our roof, and despite receiving very useful cheques as payment for ‘fuelling the grid’, to hear that Boards are going to raise their charges by 19% it seems quite clear that there is no financial benefit to us: we are now in effect paying ourselves for what produce via increased charges! Or am I missing a trick somewhere?

Whilst it is good that the government is going to restrict F-I-T for very large scale schemes, we do hope that it doesn’t penalise and jeopardise village and other community-based projects. That would be a real pity and frustrate the aims of reducing reliance in fossil fuels, creating greater diversity in energy generation and extending access to alternative energy. The creation and maintenance of a world-class renewable energy industry is vital to our whole economy. It’s sad that so much of the hardware for this industry is being made elsewhere; we could all benefit from promoting British-based manufacturing and innovation in this field. That’s not going to happen if the incentives to participate in the industry are curtailed.

We need to encourage the investment in pv to make it cheaper for future generations .the cost will come down.But it is not fair to make poor people pay for this initial investment.Can the companies not consider making the standing charge disappear and making high consumption users pay more as they can obviously more afford it.Also it will encourage careful consumption.The goverments we have had over the last 30 years have all been making poor decisions.I see many examples of bad judgement.Thank god they have stalled health reforms

Yes, I agree that large firms should not be able to make fat profits out of Solar Voltaic production. However, that should not mean that large schemes are not allowed. There are many house-holders who would like to pay for an installation and reap the benefits but are unable to do so for reasons of sun direction, or because the house is old and is a listed building. Why not make it possible for people to subscribe for panels which are not on their own houses but are part of a large installation on a suitable site? They would pay for the number of panels they wish to have and receive the pay-back but the installation may be some miles away. It would mean that all their electricity would be fed into the national grid but isn’t that what we as a nation want? Would this not save the building of a power station or two?
I mentioned this to our local MP so hope he may have passed this on to the relevant Committee in parliament for consideration, but it might need a bit of a push!

Solar PV and Solar hot water systems do work.
The problem is how the economics pan out and how the economic systems have been set up.
Solar would never pay for itself without the FIT. The PV array has a working life of about 25 years and if it was just lower electricity bills this would amount to a considerable loss over that 25 year working life. As it stands spend £12,000 to £15,000 on a decent size array and with the FIT it will pay or itself in about 12 to 15 years, and from then on you could expect to make perhaps £1000 per year. So over 25 years it’s quite a positive investment. But, you’re locked in of course, unless you move house and manage to recoup the original outlay with a higher selling price than would otherwise be.
So the FIT is essential, however the problem lies with where the FIT money comes from. It is basically a stealth levey on everones bill, and that’s not entirely fair because many many bill payers could never get in on the game. The FIT money, all of it, should come from general taxation, like income tax, because only that way is the levey fairly charged on the basis of ability to pay, and it fits with the ethos that Co2 reduction is everyones problem, and as said any levey is fairly based on the ability to pay it.

Solar Hot water is never going to pay for itself. For six months of the year I only use gas for hot water and it works out at about £9 per month. Solar hot water might save all of that £54, but produce next to nothing for the other six months. So we’re looking at say £50 to £60 per year, and how much is a solar hot water system? £4000 or £5000? You don’t need a degree in mathematics to see that payback is a bit on the long side.

Now don’t get me wrong I’m all for solar energy, the sunlight is free, but for solar to really take off meaningfully incentives fairly financed need to be introduced, specially for solar hot water..

If you’re rich enough to go solar to save the planet I applaud you, but be under no illusion about the economics and fairness of the whole setup.

And whatever you do don’t borrow to set up any solar installation with things as they stand. It would be cheaper to burn £5 notes to keep warm (OK bit of an exageration but you get the point)

the PV scheme seems to me to be a bargain for private householders with small installations, but bad for tax payers (the efficiency in UK is only about 5%) and the scheme is
troublesome to keep going. Our electrical supply company requires readings every three months to within a week, does not provide accounts and says it makes payments direct into our bank account. These are difficult to trace. Thus the system is geared to the business community, though it is families that should benefit. Could the system be more user friendly?

We would love to be able to generate and use renewable energy and make use of the FIT scheme. But we live in a grade 2 listed building which is divided into 3 properties. Last time I enquired our local planning authority will not allow any solar panels on the roof. The nature of the property with walled gardens mature trees and cobbled paths would make siting panels elsewhere or use of wind turbines or ground sources impractical.The large sash windows cannot be altered (again planning restraints) to reduce heat loss (heavy curtains help) so we are reliant on expensive oil as there is no mains gas and wood burners are not practical for an upstairs apartment. With our heating bills already higher than most I fail to see why we should subsidise others who are able to reduce their costs. This argument is even stronger for consumers on low incomes in rented accommodation who will also be trapped and unable to make changes or improvements for whom energy bills are a high proportion of their outgoings.

Feed in tariffs are, economically speaking, taxes, however as the government never sees the cash it can pretend that they are not. Were all forms of renewable energy generation subject to the same FIT levels, then although consumer prices would still remain higher than otherwise, the market would not be distorted. As it is, FIT levels are not and the result is that potential suppliers, quite naturally, game the system.

Beyond the scandal relating to PV FITs, a further result of this gaming is the proliferation of what, bar the FITs, are otherwise sub-economic renewable generation facilities. In the area in which I live, “small scale” (meaning 150ft tall) wind turbines are popping up all over the place, to the benefit of a few farmers and at the cost of industrialisation of a precious rural environment. The behaviour of the farmers and developers is quite rational, but the market distortion is again having unforeseen consequences.

I have noticed how many airlines now breakdown the various taxes and levies, both public – like air passenger duty – and private – like “security” charges, that are added to airfares. I would urge the major energy retailers to follow the same path and identify clearly how their bills are formulated, even to the extent of isolating transmission and primary fuel costs per KWh. Only when consumers actually see what “tax take” (in addition to VAT) they are paying will this country engage in a reasoned discussion of how best to renew its energy infrastructure to meet future demands.

Quote: “The trouble is that when the scheme was launched last year, the previous government didn’t predict that companies would cotton on to the fact that there’s money to be made here.”

Really?
I mean – Really????

I had a 3.7kw panel system installed at beginning of April with a 40% grant and repayment of balance of cost of installation interest free over 25 years, with debt linked to my property by local council. The idea being that either I or the buyer of my property if i sell it will pay off or assume responsibility for the balance outstanding. No up front payment by me at all. Repayment of interest free loan per month will be about £30 or £360 per annum. Income from FIT estimated at about £1500 per annum. Actual energy generated from 1 April to end May was just over 1000kwh; which translates to over £430; with the additional benefit of 25% less energy consumed according to my electricity bill. So its a thumbs up from me!

feed-in tariffs are inherently unfair as they are funded from everyone’s utility bills but only the comfortable middle class upwards will be able to take advantage of the subsidy. Most lower middle class and working class people cannot afford the capital outlay and could only be locked into the schemes where companies rent your roof space and they receive the income or not participate at all (more likely) – thus they who can least afford it will be funding the slightly smug sounding people above who are able to afford the investment. As Chris points out above the return on investment is much less than people think and is totally locked into the scheme. It would be far better for the government to stop offering to subsidise all energy schemes and draw up a coherent energy production and management plan that gives direction to utility companies. Market forces (don’t laugh) would quickly identify those that are viable and affordable and energy companies would pursue those – offering wind farm subsidies and FIT etc distort markets at the tax payers expense. If you think you can afford to invest in PV and can sell your energy to a company then fine – but why do those who cannot afford it have to help you to make money? Central government is useless at putting in place policies that will not be taken advantage of by commercially aware entrepreneurs – always at the tax payers expense!

i inherited a roof hot water solar panel on a holiday home bungalow that I bought 2 years ago on south coast. it produces very hot water even during winter months, too hot to put your hand under when running water in a sink to do the washing up. the technology does not rely just on intensity of heat of the sun as implied in comment above although less daylight does make a difference. i think the previous owner of the bungalow qualifed for a grant when having it installed. Not as good a return on investment as the FIT scheme but every little helps….

The place for large scale industrial solar arrays is a desert.
To use farmable land for that purpose is ridiculous, as we need it to grow crops.
We have no deserts in the UK.
What we do have is an abundance of private rooftops, and they need to be covered with solar collectors.

Just had a 3.92Kwp system installed. The FIT scheme is designed to encourage the take up of this technology as part of a long term govt strategy to reduce our dependence on other energy sources.
having no energy policy is not an option. It is easy to say that the FIT scheme is not perfect but the govt have already taken action to adjust the rules to focus the resources more at the intended users. In April the domestic rates will change as well. At a personal level the economics looked great so I did it. In that respect the govt scheme has added 1 more solar pv system to the grid. You cannot condemn businesses or individuals for taking advantage of attractive investments. If you need to blame somebody then it should be the scheme designers. In the meantime, what are you waiting for? There may never be a better time to invest! And when the RHI scheme starts properly next year it may be worth taking a serious look at that as well.

Hi – how will organisations delivering these solar pv installs going to survive? Will they have a problem reducing their total operational costs? What is the survival strategy? Or is it about survival or mere reduction of profits? Would welcome thoughts ….

The debate is reopened as the government has now decided to hit the domestic FiT with a cut of over 50%. Which was quick to support the earlier reduction in support for field arrays on the grounds that “more of the FIT payments – which come from people’s pockets – will be protected for households, communities and small businesses”. I hope they will not be so supportive of the government’s latest action which effectively undermines a large part of the domestic solar energy market. The FiT has in fact achieved its aim by creating a market in which the costs of solar installation have fallen by 30%, so a reduction in the FiT was right. But the cut should be phased in more slowly (over 6 months say) and be of the order one third. As it is jobs and businesses will be lost and the fledgling solar industry largely destroyed.

I fitted PV and a solar thermal a few years ago. It is not a particularly good investment but I was interested in having solar energy production. It has not been without hassle as G4S has to check your meter every 2 years. They say they have visited but could not gain access. There is no evidence of the G4S visits and the the electricity company then say they are suspending your feed in tarriff until the meter is checked. It is well known that G4S pretends that they are doing government work when they are actually sitting on there hands. Remember the security debacle at the Olympic games.
Considering the hassles I have experienced I could not recommend Solar PV to anyone. Also when I had solar thermal installed to heat the hot water cylinder I was told there was a solar thermal feed in tariff about to be introduced and that was 3 years ago. There is still no solar thermal feed in tarrif.

Unfortunately delivery drivers, and presumably also meter readers, can call at the wrong house, find no one in, and leave a telephone card. Of course this gets thrown away as no one is going to spend a couple of hours listening to music interspersed with bare faced lies about “your call being important” just to tell them that they called at the wrong house. [Important calls are not queued at a call centre.]

As to PV, the FIT is only part of the reward. Assuming that the homeowner paid for the panels, the alternative is to invest money and use the income to pay the electricity bill. This income is subject to income tax. If you have solar panels, you are simply not buying the electricity, so there is no income tax on the value of the electricity you use on site.

What would be better than a FIT would be to have meters that read backwards when you export. This means that people could have credit in the form of electricity stored for them to use at night and on dull days.