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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?

Comments
Member

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?

Member
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

Member

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.

Member
Chris Powell says:
10 June 2011

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.

Member

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!

Member
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.

Member

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.

Member

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?)

Member
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