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

Solar panels

It’s rare that a campaigner agrees wholeheartedly with government, but that’s how I feel about today’s announcement on feed-in tariffs. Why? Because companies can no longer profit from large-scale solar schemes.

Feed-in tariffs – or FIT – were first launched last year to support people to generate their own renewable electricity.

These people can earn money for every unit of electricity the feed back into the grid. But it’s not free money, all of us pay for the scheme through our energy bills, so we believe the scheme must give value for money.

Today’s announcement confirmed that the government will reduce the rates they pay for large-scale solar, but only for new installations. This will only affect large-scale operations, such as big solar farms, not household schemes or many community schemes.

We support fairer FITs

The new tariffs won’t be popular with the solar industry but we’re glad the government stuck to its guns. It means that more of the FIT payments – which come from people’s pockets – will be protected for households, communities and small businesses.

These are the people the scheme was designed for; not for big businesses to make profits from investment-scale schemes. The changes announced today mean that large-scale installations aren’t going to be so attractive to companies looking to earn a big payback from schemes subsidised by UK electricity users.

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.

The Department of Energy and Climate Change’s (DECC) figures showed an alarming number of large schemes were in the planning pipelines – they estimate that just one very large scheme would swallow up the cash that could be spent in one year on renewable technology for 1,250 homes.

What’s the true cost of FIT?

We all pay for the FIT through our electricity bills – DECC estimated in 2010 that it would add about £8.50 a year to each household’s bill in 2015. While that doesn’t seem like a lot, some businesses are cashing in by installing big solar PV systems that can earn them tens of thousands of pounds a year.

So while we support today’s announcement, we want government to go further by working out how much we’re paying for FIT and other environmental schemes through our bills. DECC admitted to us that all that it has are estimates on whether the £8.50 prediction is true; nor can it tell how much the amount added to domestic consumer bills compares to business bills.

FIT should be as value for money and cost-effective as possible in delivering its objectives of reducing carbon emissions, and helping people cut their energy bills. We’re not against FIT, we just don’t want consumers writing a blank cheque for a scheme that not everyone can benefit from.

It’s estimated that 4.5 million people already have difficulty paying their energy bills, so the payment for FIT coupled with the other schemes we automatically pay for through our bills like CERT, could soon push the costs up, forcing more people into fuel poverty.

Do you think that the FIT system is fair? Is it worth paying £8.50 per year for the environmental benefits? Do you agree that DECC needs to be more transparent about how much you are paying in your bill for it?


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?

Adrian Phillips says:
10 June 2011

Dear Miranda:

If you are really to launch a well informed debate about the costs of the Feed in Tariff, you had better be clear about the additional cost on bills. These are estimated at £8.50 a year but you say £8.50 a MONTH in the last para above! No wonder people are confused, Red faces I hope at WHICH!

Adrian Phillips


Thanks for pointing out that error Adrian. As you can see the cost was correct in previous paragraphs, however we’ve now corrected it. Sorry for the confusion.

Chris Powell says:
10 June 2011


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!

Eric G. Knowles says:
10 June 2011

The true costs of the scheme should also include any costs for maintenance, servicing, and replacement of the equipment. How long do the parts last before they need to be replaced?
We are beginning to identify the true cost of the more energy efficient boilers and the problems due to sustained low temperatures. We need to have visibility of the issues associated with equipment used for providing renewable energy.


Although the government try to encourage installation of this equipment by making the VAT penalty on so doing 5% rather than 20%, the VAT penalty on getting it serviced is still 20%. This is probably an oversight, but it needs to be corrected. Wind turbines that are not serviced are likely to be less efficient, and could indeed become dangerous as they age.


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?)

Michael Smith says:
10 June 2011

The FIT scheme is a good scheme for reducing our dependence on fossil fuels. In some ways it is a shame that the larger PV schemes will no longer be supported as these can generate significant quantities of power. The problem with looking at current costs is that they make no allowances for the rising price of fossil fuels. The real cost of fossil fuels is rising rapidly, and will continue to rise for the forseable future as the world recovers from recessions and economies in China, Inda South and Central America grow. Our dependance on imprted fuels makes us extremely vulnerable to political events. Do we really want to continue to rely on imports from Russia and the Middle East, or Fracking to release shale gas locally,or return to deep coal mining with all that implies?
Whether or not you believe in global warming, we desparately need to invest heavily in renewable energy for the future of our children.


I agree that the largest installations are the ones that can make this biggest contribution to reducing our dependence on fossil fuels, but the kind of schemes that can really do this need to be in the hundreds of MW rather KW that are supported by the FITs. I also don’t think the UK is the best place to house the size of PV that is needed – large scale off-shore wind should be our preferred option in my opinion.

Large schemes are still supported under FIT, but UK consumers are no longer paying through the nose to support them.

John says:
10 June 2011

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.!

Paul Wakelam says:
10 June 2011

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?

Bruce G says:
10 June 2011

I think that your article completely misses the point of having Feed in Tariffs. We are aware that our current energy production is either unsustainable or potentially unsafe. Therefore there has to be a mechanism for us to address this and encourage the energy industry in what ever way, shape or form to move to alternative and sustainable production. As with any new industry there needs to be development and research before the technology becomes economically efficient – look at computers. If we do not allow the large businesses (normally backed by pension funds) into the industry we will not have the development of technology. With out that, we will not get to a point of efficiency such that the energy can be produced cheaper than fossil fuel and nuclear.
This does not even touch on the issue of energy security. As we saw with the gas pipeline into Germany being shutdown and the dramatic impact it had on the economy, we need to ensure we can be self-sufficient to avoid political or financial energy blackmail.
In conclusion, we need to encourage EVERYONE to be moving to renewable energy sources and all be willing to dig into our pockets to look after the next generation. As to the actual financial impact on households, the cost increase per household in a year is less than the tax on one tank of fuel in the car.