Will FIT's Be Beneficial Long Term?

Back to News

Will FIT's Be Beneficial Long Term?


Everyone likes to feel as though they are doing something for the planet but it feels even better to be paid in cash for it.  So when the government launched the feed-in tariff (FIT) scheme last April homeowners could be paid for every unit of “home grown” electricity that they produced, producing green homes and eco friendly homes throughout the UK.  Payments were up to 41.3p per kilowatt-hour (kWh), which is three times more than the average consumer price.  So solar panels and domestic wind turbines now look like serious investments rather than expensive eco gadgets.  However these subsidies might become unsustainable due to a trend of “solar farms” being created.


Solar farms are set up by investors who buy land and then cover the land in photovoltaic (PV) panels.  In October Cornwall council granted planning permission for the first solar farm of its kind in the UK.  The site was a former tin mine in Truro and it may be the first but it won’t be the last as several others are already planned.  These projects are almost 2,000 times larger than a domestic one and so the tariffs have to pay a lot out for them.  As a result Chris Huhne, the energy secretary, has now launched a comprehensive review of FIT’s beginning this month, so how will this affect the average homeowner wanting to generate their own electricity but want some financial gain too?


FIT’s work by paying people for every kWh of electricity that they produce and it does not matter whether they use it or not.  Payments do vary on the type and size of generator and small domestic systems earn more per unit than larger ones.  Power that is fed back to the grid earns an extra 3p per kWh.  So far 22,000 homes in the UK have signed up for FIT’s of which 95% have installed PV panels.


Changes to the tariffs will come into effect by April 2012 and all categories of FIT are affected such as wind, hydro and biogas.  But the energy secretary has announced that there will be a fast track review of tariffs for PV installation and will look at cuts in payments of large scale projects of 50kW or more.  FITs payments are not funded by the government; instead they are funded by a levy on electricity bills. 


Domestic tariffs are not necessarily safe.  FITs were supposed to be fixed until April 2013 but this has already been brought forward by a year.  However once you join the scheme you will continue to receive payments at your initial rate with just adjustments for inflation.  So the message is that if you are thinking of going solar, then the sooner the better.


There is also the Renewable Heat Incentive (RHI) which is a scheme that aims to get householders to generate their own heat as opposed to electricity.  It was supposed to begin in April.  This scheme will be funded by the Treasury at a cost of £860million over the next four years.  It will offer payments for solar heating, ground and air source heat pumps and biomass systems.

Current Development Sites