The Feed-In Tariff (FIT) scheme has undergone a number of significant changes since its launch on 1 April 2010. A number of these changes have come into effect as part of the FIT Comprehensive Review consultation run by DECC, which took place between 31 October 2011 and 26 April 2012.
A summary of the key changes that have affected the scheme since its launch include:
- Greater clarity in relation to the accreditation of installations that may have received grant funding;
- A reduction in the tariff lifetime for new PV installations and extensions from 25 years to 20 years;
- New energy efficiency survey requirements for new solar PV installations to establish the level of FIT payment;
- The introduction of a multi-installation tariff for solar PV installations of 25 or more;
- A degression mechanism for solar PV installations which allows for the periodic reduction in tariffs on the basis of deployment.
The FIT scheme is available through licensed electricity suppliers. It requires them to make tariff payments on both generation and export of renewable and low carbon electricity. Both generation and export tariff rates are index-linked.
Despite media negativity about cuts to tariff levels, Norcroft have found that the Return on Investment (ROI) has increased since the early years of higher tariffs. Even though the tariff rates are lower, the ROI is very healthy.
British Gas have recently reported an 11% rise in profits. Thanks to a particularly cold period there has been a 12% increase in gas consumption that was worth £606 million to the energy giant. British Gas’s profit announcement comes less than four months after the supplier upped its tariffs by 6.5%. According to the Express, the average annual British Gas energy bill has risen from £543 in 2004, to £821 in 2008, and now stands at £1,336. What’s more concerning is that energy bills in the UK are only going to continue to go one way – up, according to the Ofgem Chief Executive.
As energy bill price rises are inevitable we advise customers to look to renewable energy sources.
A large 4kW domestic solar PV system can now be purchased for around £5-7,000 (the same amount of money the average British Gas customer spends in five years). Forgetting the feed-in tariff for now; What £7,000 buys you is a way out – an escape from the Big Six’s stranglehold. For the next 20 years (absolute minimum) not only will your consumption of electricity drop dramatically, but you will also be protecting yourself from any future energy bill rises passed down from suppliers. As an added benefit, the feed-in tariff scheme will allow you to earn returns in the region of 8-12% by paying you for every unit of electricity you generate.
Solar PV Feed-In Tariffs have been frozen again by Ofgem until 1st July 2013.
Source: Solar Power Portal & Ofgem
For more information on the Feed-in Tariff, please call us on 01226 763 127.