Milliband announces ‘feed in tariff’ rates

04 February 2010

The feed-in tariff for small scale low carbon electricity have been announced ready for 1 April start date. ‘Green’ private and social housing, and community facilities will benefit from the payments.

Households and communities who install generating technologies such as small wind turbines and solar panels will from April be entitled to claim payments for the low carbon electricity they produce. Energy and Climate Change Secretary Ed Miliband has announced the feed-in tariff (FITs) levels and also published a blueprint for a similar scheme to be introduced in April 2011 to incentivise low carbon heating technologies. The renewable heat incentive (RHI) will be a world first.
From 1 April householders and communities who install low carbon electricity technology such as solar photovoltaic (pv) panels and wind turbines up to 5 MW will be paid for the electricity they generate, even if they use it themselves. The level of payment depends on the technology and is linked to inflation. They will get a further payment for any electricity they feed into the grid. These payments will be in addition to benefiting from reduced bills as they reduce the need to buy electricity. The scheme will also apply to installations commissioned since July 2009 when the policy was announced.
A typical 2.5kW well sited solar PV installation could offer a homeowner a reward of up to £900 and save them £140 a year on their electricity bill. The schemes are designed to bring about a significant increase in the amount of locally produced green energy, as a contribution to the wider shift of the energy mix to low carbon.
Ed Miliband said: “The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living. The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past. It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology.”
He visited low income homes in Dagenham being helped by eaga’s Clean Energy for Social Housing project to make the move to microgeneration. The scheme offers free clean energy technology to tenants in social housing which will lower their electricity bills and carbon emissions.
John Swinney, eaga Director of Strategy and Corporate Services, said: “By utilising the feed-in tariff initiative and installing free solar technology this programme can cut energy bills for those most in need. We are also recruiting and training renewable energy engineers directly from the local communities where the green technology is being installed. This innovative development can be offered right across the UK. We expect thousands of households to benefit in the first few years and up to 300 additional green energy jobs could be created as part of this programme.”
The Department of Energy and Climate Change also published today plans for a scheme to incentivise renewable heat generation at all scales. This will come into effect in April 2011 and guarantee payments for those who install technologies such as ground source heat pumps, biomass boilers and air source heat pumps. Under the proposed tariffs the installation of a ground source heat pump in an average semi-detached house with adequate insulation levels could be rewarded with £1,000 a year and lead to savings of £200 per year if used instead of heating oil. The heat incentive could help thousands of consumers who are off the gas network lower their fuel bills and gain a cash reward for greening their heating supply.
Details of funding for the scheme will be published in the Budget 2010.
Ofgem will administer the feed-in tariff scheme and suppliers will be responsible to paying the reward to their customers. The renewable heat incentive will start operating in April 2011. Ofgem will be responsible for making payments direct to heat generators. Householders and communities can apply for the feed-in tariff from their electricity supplier from April 2010.
The UK currently gets around 5.5 percent of electricity from renewable sources and that will need to increase to around 30 percent to meet the 15 percent 2020 target for all energy.
Modelling show that small scale renewable installations could meet 2 percent of electricity demand in 2020. The UK currently gets less than 1 percent of heat from renewable sources. This this will need to rise to around 12 percent in order to meet the 15 percent 2020 target for all energy.
The eaga Clean Energy for Social Housing programme attracts funding from private sector investors, who will receive a return from the feed-in tariff element. There is no cost to the tenant and no investment required from the social landlord.

Commenting on the announcement, Paul Roche, Director, SIG Sustainable Solutions says: “The Feed-in-Tariff is great news for UK PLC and for the environment. The FIT provides a strong kick-start for the PV sector in the UK, which is potentially worth £27bn, making it one of the biggest potential growth areas of green technology. The environmental benefits are also unquestionable. By the end of 2010, the Germany FIT programme will have saved over 50 million tonnes of carbon dioxide.The FIT is great news for the construction industry too. Incentivisation programmes across Europe, especially Germany, have proved to be a massive success and provided a boost to the roofing sectors, predominately responsible for installing PV panels. The anticipated increase in demand for PV cells, following this announcement, means that UK companies have the opportunities to skill-up in the manufacturing, installation and promotion of micro generation.”
However, Roche raises concerns: “Although we welcome the FIT and the strong initial incentive it provides, the rate at which the levels are reduced in the third year of the scheme is too aggressive – currently set at around 9 per cent in April 2012. Stalling degression, the rate of which the fee is reduced, for two years time shows a good response to the consultation. Government has said it would be reviewing this in 18 months and we will be calling for a stronger, long term incentive in order to lower energy bills, our carbon emissions and increase the amount of green energy generated in the UK. We also must ensure that the FIT is as simple as possible. Too often, despite best intentions, ‘going green’ is complex and can deter those who require support. The FIT programme must be easy to set up and provide an obvious way of showing how much money and carbon has been saved.”