The UK government has announced plans to axe the Feed-in Tariff (FiT) scheme from April 2019.
The Department for Business, Energy and Industrial Strategy (BEIS) has launched a consultation to scrap the Feed-in Tariff with no plans to replace the scheme. In addition to no replacement, there will also be no grace period for projects that have oversubscribed deployment caps scheduled beyond 31st March 2019.
The FiT was initially launched in 2010 and pays small-scale renewable energy generators a fixed rate for each unit of electricity generated. These payments are funded via levies which are placed on suppliers, which are then passed on to consumers via their energy bill.
When the scheme was first introduced BEIS estimated that it would increase consumer’s energy bills by £440m per year from 2020. However, the department now claims that this predicted figure is no longer accurate and the latest estimate is closer to £1.6bn a year.
By scrapping the scheme, impact assessment analysis has shown that savings of between £1.3bn & £1.9bn could be made. These proposals to discontinue FiT are now undergoing a consultation which will take place until the 13th September 2018.
A spokesperson from the BEIS said: “Since 2010, our support has driven down the cost of small-scale low carbon electricity generation significantly. As costs continue to fall and deployment without direct subsidy becomes increasingly possible for parts of the sector, it is right that the government acts to ensure continued value for money for bill payers over the longer term. That is why government took the decision in 2015 to close the generation tariff from end of March 2019.”
In response to the proposals, Chris Hewett, CEO at The Solar Trade Association said: “The good news, as we look beyond FITs, is that solar is coming of age and while solar always makes great environmental sense it now makes economic sense for most investors without public subsidies given fair treatment by government. An average domestic solar system cost £12,000 in 2010. It is more like £5,000 today.
“The bad news is that Government has been crystal clear today on what policy measures will stop – even very basic rights to fair export payments – but they are frighteningly vague on what comes next. There is real dismay that there is now a serious & needless policy gap between the end of FiTs and the start of the new regime.”