Feed In Tariff

The Feed-in-Tariff (FiT) Scheme to Come to Close as per the Government Proposal

Feed In Tariff

Under the new plans by the government, FiTs would come to a complete close at the end of March 2019. There’s little clarity of what will take the place of the once popular incentive scheme or even if there will be anything. The Department of Business, Energy and Industrial Strategy (BEIS) launched a consultation some weeks ago with the plans to end FiTs, a programme that pays domestic as well as commercial green energy generators and exporter for the electricity produced and shared to the grid.

Feed-in-Tariff has had quite a success, generating about 6GW of clean energy through the over 800,000 installations. While the scheme has exceeded expectations even leading to unprecedented deployment, critics have argued that the programme has eaten into budgets, causing higher green levies. These also argue that emission reductions are at a higher cost than larger scale projects.

The government on its side argues that the cost of renewables has dropped and the sector doesn’t need such generous subsidy regime. The decision to close the FiT to new generation tariffs from March 2019 leaving only the export tariff functional was made in 2015. The government now proposes to close the entire scheme by March 2019.

According to the consultation, the energy system of the country is changing, with storage and other technologies playing an increasingly important role. The Government, therefore, intends to move away from driving deployment with direct subsidies for solar panel feed in tariff options.

More from the consultation show that the department feels that the current Feed-in-Tariff flat rate doesn’t align with the nation’s vision for the future. There is a desire to involve the sector with fairer, cost-reflective pricing and progressive drive to reduce support costs on consumers. All these should also support the Industrial Strategy and Clean Growth vision published in 2017.

As per the plans, there will be a strict cut-off date on March 2019 and no special provisions will be allowed for projects in oversubscribed areas. According to the government’s Impact Assessment, the termination is expected to save the average household £1 annually as compared to letting the scheme run for 5 more years.

A published document insists that small-scale low-carbon electricity generation should be able to compete with other power sources without direct subsidy, suggesting it is unlikely another subsidy programme similar to FiT will be launched.

The government, nevertheless, said it will consider changes to regulation to aid guarantee small-scale generators a route to market or access to multiple revenue streams.

Good news as the Feed-in-Tariff scheme closes is that solar is no longer at its infancy and even if it has always made great sense when it comes environmentally-friendly option, it now makes a lot of sense for an economical option for most investors. This is even in the absence of public subsidies.

The bad news is that the government is very clear on the policy measures that will end, including the very basic rights to fair export payments. What is beyond FiTs is a frightening vague also. A real dismay exists now that a serious and needless policy gap between the termination of Feed-in-Tariff and the beginning of the new regime.

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