Feed-in tariffs

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The Feed-in tariff scheme is designed to encourage the installation of small-scale renewable electricity generation.

What are Feed-in tariffs?

The scheme is designed to encourage small-scale low-carbon electricity generation by guaranteeing payment for electricity generated and used as well as surplus electricity which is exported back to the grid.

On 7 February 2011 the Government committed to comprehensively review the feed-in tariff scheme. The intention was to consider whether the original target rates of return remained appropriate whilst ensuring that the FIT scheme was able to operate within spending parameters set out in the 2010 Spending Review.

How has the Comprehensive Review affected housing associations?

The Comprehensive Review Phase 1 has had a significant and disproportionate impact on social housing schemes, with an estimated 27,000 installations put at risk and over £1 million in abortive costs. This evidence was included in the Federation’s response to the Comprehensive Review Phase 1 and has been used to inform our responses to the Phase 2 consultations on proposals for:

Why has the Government reduced the tariffs?

The Government took action to significantly reduce the tariffs after the uptake of FITs, especially from larger schemes and solar farms, exceeded expectations.

What are the current FITs?

Following the Phase 1 Review, new FITs (with approximately 50% reductions) were introduced from 3 March 2012. Details of the current scheme can be found on DECC’s website.

How will future tariffs be set?

Following the Phase 2A consultation, DECC has announced how further planned tariff reductions will be managed and other scheme administration issues. Further details can be found on DECC’s website.

What has the Federation done?

When the Government’s fast-track review to deal with solar farms was announced in February 2011, the Federation made recommendations on the terms of reference for the planned first Comprehensive Review of FITs.

We surveyed housing associations about their experience of FITs. The survey confirmed our concerns as to how few housing association homes had solar panels installed and were receiving FITs. We found schemes had been delayed by EU procurement requirements and legal negotiations.

The scheme has operated regressively since social housing has received disproportionately fewer FITs, which could make fuel poverty worse for low income households because it adds a levy to all energy bills. The main beneficiaries of FITs are those on higher incomes.

We commissioned research on the level of FIT needed to support social housing schemes in which the electricity goes free to the tenants and only the FITs income goes to the landlord. The current tariffs do not recognise this situation.

We used this evidence to inform our responses to all phases of the Comprehensive Review process.

The Federation continues to have detailed discussions with DECC on installing a tariff system that recognises the social housing business model and supports installations for low income residents.

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