How the Feed-in-Tariff ending in April 2019 could affect you
Posted by Sam Tonge on 27 February 2018 at 11:35 am
The Feed-in-Tariff (FiT) is a Government scheme designed to promote the uptake of small-scale renewable and low-carbon electricity generation technologies, including mainly solar PV, but also anaerobic digestion, micro-hydro, wind power and cogeneration.
The FiT pays individuals and businesses for creating their own clean electricity via a generation tariff with extra payments available when they generate more than they use (known as the ‘export tariff’). The scheme was introduced in 2010 but has faced deep cuts of 65% in the value of payments (as the cost of installs have come down), having a dramatic impact on the prospects of the solar industry and microgenerators alike. What’s more, following the Treasury’s ‘Control for Low Carbon Levies’ document (published alongside the 2017 Autumn Budget), the scheme itself now faces an uncertain future as we creep towards its earlier-than-scheduled closure in April 2019.
This uncertainty and lack of clarity on what will happen next year is not only frustrating for everyone with a stake in the industry but also means that investors are increasingly avoiding solar altogether, instead choosing to take their money elsewhere.
According to a joint letter from energy bodies including the Solar Trade Association, landowners and other interest groups, the Government consultation into what could replace FiTs is now a year overdue, with a potential ‘cliff-edge scenario’ extinguishing the benefits that small-scale clean energy projects can deliver in our communities. Although the reason for the delay is unclear, a consultation on the future of the FiT was recommended in the Government’s ‘Cost of Energy: Independent Review’ carried out by Professor Helm last year, and has raised concerns about potential job losses in small businesses across the UK.
Although Energy and Climate Change Minister Claire Perry has agreed to meet the letter’s signatories to discuss their concerns, last year’s budget stated that there will be no new subsidies for green energy until at least 2025. The Government’s development of its new ‘Control for Low Carbon Levies’, is designed to lower the cost of energy through limiting the cost of green energy schemes that are added to consumer energy bills “until the burden of such costs is falling”. Hence, future support for any technology is not being ruled out and all existing contracts and commitments ‘will be respected’.
So what should I do?
Given the political and industry uncertainty, you might understandably be wondering what this might mean for you as an individual resident.
If you already receive FiT payments for existing green energy technology, you will continue to receive these for 20 years from the date you had your technology installed (10 years for CHP) – or even 25 years for those who first benefited from the FiT scheme.
If you’re looking to get in on the microgeneration game by benefitting from solar PV on your rooftop then you can still do so, as long as you apply before the end of March 2019. As stated above it’s still not clear what the alternative to the FiT scheme will be once the Government carries out its delayed consultation. However based on the recommendations of the Helm Review and the continued cuts to tariff rates throughout this past decade, it could be argued that it’s unlikely that any potential replacement incentive will match the standards of the current scheme.
Therefore we suggest that if you’re keen to go green in your home by getting solar PV installed then it’s probably best to do so during this year. There’s no time like the present, so why wait until after April 2019 and potentially end up financially worse off than had you installed the technology during 2018? Although recent innovations and widespread deployment of domestic battery storage options are worth citing, it’s just as unclear at this stage to say whether or not this will provide immediate or equivalent compensation to individuals and businesses, following the loss of Government subsidy.
It’s also worth noting that there are no current plans to scrap the Renewable Heat Incentive (a different scheme whereby payments are made to those who own technology producing renewable heat). Important reforms recently announced are now undergoing parliamentary consultation but indicate no intention to stop the scheme entirely.
So if you want to green your home but you’re not currently able to install clean electricity technologies before April 2019, green heating methods might be your best bet.
The rates of payment you can receive for both schemes are published by Ofgem who administer them, although it’s worth mentioning that the programmes differ in terms of their eligible technologies, contract rules and payment amounts/schedules.
So are we anywhere near closer to finding out the fate of the Feed-in-Tariff come April 2019? The answer is - not really, but watch this space. We await with anticipation any future developments from the Department for Business, Energy and Industrial Strategy (BEIS).
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Image credit: Michael Coghlan
About the author: Sam joined YouGen in 2017 as a Project Officer, after having achieved a BSc (Hons) degree in Geography from Royal Holloway, University of London.
He is passionate about renewable energy and sustainability and has undertaken a variety of placements focused in these areas.
Sam coordinates the YouGen blog, newsletter and recommendation service on behalf of installers, as well as driving the platform forward through an active social media presence.
If you have a question about anything in the above blog, please ask it in the comments section below.
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