Feed-in tariffs next in line for government axe

Feed-in tariffs that boost solar panel schemes could be the next green subsidy to be axed, according to a new government consultation.

The Department for Energy and Climate Change has begun a public consultation on feed-in tariffs (FITs), due to “projected overspend” on the scheme and partly because it is required to review subsidy schemes every three years by the European Commission.

The scheme allows households to claim money from energy suppliers if they generate their own electricity through renewable sources, most popularly used through solar panels, but also through wind turbines.

Under the scheme, households receive a set ‘generation tariff’ for the electricity they generate, and also an ‘export tariff’ for any extra units of energy they don’t use, currently set at 4.77p per unit of electricity.

The department says that should it consider that the scheme is unaffordable following the consultation, it will propose ending generation tariffs to new applicants “as soon as legislatively possible”, which could be January next year.

DECC has proposed limiting the scheme to a “maximum affordable budget” of between £75m and £100m, as part of “the government’s desire to set a clear pathway to a subsidy-free world for the technologies supported under FITs.”

The consultation document states: “This consultation sets out proposals for a fundamental review of the FITs, intended in the short term to control scheme costs effectively.”

DECC says the proposals it has put forward would put the scheme “onto a more sustainable footing which provides consumers and industry clarity on levels of small-scale renewable electricity support until 2018-19.”

Among the options being considered that could “build on or replace FITs” are continuing FITs as an export tariff-only scheme, removing the ability of new installations under the scheme to extend their capacity, and capping installations under the scheme to 12,000.

The government has also proposed not to extend FITs to Northern Ireland.

It had considered extending the scheme to “take account the lack of a support mechanism for small-scale renewables” in Northern Ireland, but does not intend to extend FITs as it would be “likely to increase the cost of the FITs scheme at a time when we are seeking to limit costs under the scheme.”