DECC reveals the truth behind FiT confusion

As with all new technologies, myths and misconceptions appear during the teething stages, yet these are usually dispersed within the first couple of months. However, in the case of renewable energy, people are a little harder to convince.

Since the introduction of the UK’s feed-in tariff in April, sites such as the Solar Power Portal have fought tooth and nail to highlight the benefits of solar energy, strongly backing the government’s generous feed-in tariff (FiT) scheme which pays above and beyond the price for conventional electricity. However, the mainstream rags seem to find it more difficult to praise this clean technology. After one paper published yet another misguided report, we spoke with the DECC to bring you the truth behind it all.

Mainstream publication, the Telegraph has today (September 28) published an article entitled, “Household solar power: a shock in the small print,” which claims to unveil a hidden catch when it comes to generating your own green electricity. Personal Finance Editor, Ian Cowie, writes that, “Energy companies are encouraging homeowners to spend thousands of pounds fitting panels by offering to pay substantially above market rates for the electricity produced. Contracts promise ‘feed-in tariffs’ over 25 years with inflation-proofing. But a sharp-eyed reader from Suffolk points out that a clause in the small print allows tariffs to be changed at any time in the future.”

The culprit here, Michael Crisp, 77, a former aeronautical engineer, wrote into the Telegraph with this ‘revelation.’ “This warrants a serious warning to potential investors in solar panels. The electricity companies have terms and conditions which run to 16 pages of fine print in the case of EDF, my supplier, and these include;

“Clause 4.6. which states that the generator – that’s the householder – acknowledges and agrees that the generation tariff and export tariff as set out in the term sheet shall be subject to variation, as determined by the authority from time to time and pursuant to the operation of the scheme.

“The various panel installers are freely stating that the feed in tariff is good for 41.3 pence per generated unit for 25 years with retail prices index-linking. It does seem like money for old rope – but is it, really, when the terms can be changed at someone’s whim?”

This has of course been grossly misconstrued.

While we admit that the policy out there is slightly confusing (hence the Solar Power Portal’s existence), we would also like to think that people do a little research before buying into something and then complaining about it. Here are the facts (as outlined by those who put the policy in place):

You will qualify for the full FiT payments if:

– The system was installed between 15th July 2009 and 31st March 2010; OR

– It was installed on or after 1st April 2010 using an MCS certificated product and by an MCS* certificated installer;

* The Microgeneration Certification Scheme (MCS) is an independent scheme that certificates microgeneration products under 50kW and installers in accordance with consistent standards. Any systems over 50kW and all anaerobic digestion installations must apply directly through the ROO-FIT process as they are not covered by the MCS.

The system owner (the generator) will then earn that payment for a FULL 25 years.

Yes, the feed-in tariff is subject to change, however, this change will only apply to new customers, not existing ones. The tariff you receive when you sign up is the tariff you will receive for 25 years.

The energy providers have absolutely no control over the tariff rates, and the clause as written above, “the generator acknowledges and agrees that the generation tariff and export tariff as set out in the term sheet shall be subject to variation, as determined by the authority from time to time and pursuant to the operation of the scheme,” simply outlines the point demonstrated and prevents homeowners from turning round and getting disgruntled if the tariff is increased, as they will not be eligible for that new rate.

The Solar Power Portal went straight to the DECC for comment (since that’s what EDF advised the Telegraph to do) and they concur what it written here, outlining Energy Minister Chris Huhne’s recent comments at the DECC Select Committee earlier this month:

“If you look at the feed-in tariffs, the situation is that if you go for an installation now you know exactly what the return is going to be all the way through, and I’m absolutely determined that, unlike in some other EU countries, there will be no question of investors being able to call us and criticise us for having retrospectively changed terms. That would be completely out of order against our parliamentary and legal traditions. So, I think that if investors go for a particular scheme, they can rely on that in terms of the feed-in tariffs.

It does not mean, of course, that we cannot review in future feed-in tariffs and make announcements for investors that we will change the terms if we think that they are not generous enough or that they are too generous.”

So there you have it, in black and white, some things just are as good as they sound.