Are FITs Going To Pay Long Term?

If you generate your own green power then you could be earning yourself some cash as well as being eco-friendly. The government feed-in tariff (FITs) was launched last April and allows homeowners the chance to sell their home grown electricity and get paid for each unit that they produce. Payments are around 41.3p per kilowatt-hour (kWh) and this is more than three times the average consumer price. Some investors have taken note of this and bought wind turbines and solar panels to cash in. This has made to levels of subsidy unsustainable; investors have purchased large fields and covered them with photovoltaic (PV) panels. Cornwall council has just granted permission for the first scheme of its kind, the site is a former tin mine near Truro and many more look to be planned. These sort of projects look to be 2,000 times the size of small domestic ones and so there is a lot of money to be made.

The energy secretary Chris Huhne has now ordered a comprehensive review of FITs and so this may change the way homeowners generate their electricity. Homeowners receive payment for the electricity they produce whether they use it or not. Small domestic generators earn more per unit than the larger ones. Of the power that is fed back into the grid, homeowners earn an extra 3p per kWh. In the UK 22,000 households have signed up for FITs and of these 22,000 95% of them are using PV panels.

Payments for FITs do not come from the government but from the levy on electricity bills. A spending review conducted last year placed a cap on FITs at £360million by 2014-15 and so as a result the energy departments are now taking action. It does not just affect solar power but all categories that come under FITs. These are wind, combined heat and power, biogas, hydro and of course PV. They will all be reviewed by the end of the year and if any changes to the tariff will occur it will take effect in April 2012. Mr Huhne has asked for a fast track system, to be completed by the summer, in regards to PV installations and anything over 50kW. The payments may be cut for these large scale projects.

That does not mean that domestic tariffs are exempt, FITs were supposed to be fixed until April 2013 but this has already been brought forward a year. Once you have joined the scheme you will continue to receive payments at your initial rate for the entire time of the scheme, although inflation may lead to adjustments. Therefore the message is that if you are intending to install solar panels it is better to do it sooner rather than later. The tariff for newly fitted solar systems falls by 8.5% every year so by 2021 it may be 18p per kWh instead of the 41.3p until 2013. So as the government reviews its incentives green households may be losing out in the future, even though the government promotes green living as the ideal way.

Miss Fiona Davies is Sales Director for
She has worked in the property and land sector for the last ten years.
All articles on the website are written uniquely by her.

Original article