Solar Feed-in Tariff

The Feed-in tariff is a government backed subsidy that pays you for every unit of (green) electricity you generate regardless of whether you use it or not. The rate is fixed by the government and is guaranteed for 25 years starting from the date the system is commissioned and is free from tax and linked to inflation.

Why do we have a Feed-in tariff?

The Feed-in tariff we have in the UK was introduced in April 2010 to help stimulate demand amongst families and businesses to generate their own green energy. The history of the subsidy itself is rooted in Germany in the early years of the decade.

A team from the German government realised that the most effective way of encouraging people to generate their own energy was to pay them for it. Not only did this mean thousands of families installed solar systems because it made good financial sense but also that jobs were created in the process (they estimate the German PV industry employs 250,000) and as people saw the panels around them, awareness of climate change and the potential of solar grew very quickly.

Who pays for the Feed-in tariff?

The Feed-in tariff is a government-backed programme through which generators of green electricity are paid for every unit (measured by the kWh) they produce. The amount is recorded by a generation meter and every 3 months the subsidy is paid by the utility (via your normal electricity bill). The subsidy itself is funded by a levy on the electricity bills of every consumer in the country. In Germany the average bill is thought to have increased by a handful or Euros each year — hardly noticeable in an era of utility price hikes and fossil fuel depletion.

Is the Feed-in tariff fair?

As we shift from depleting fossil fuels onto sustainable energy sources like solar there will naturally be a cost to pay, just as billions of pounds of tax-payers money were paid to set up our natural gas networks in the 1960s. However, the Feed-in tariff does have a real advantage over the gas subsidies that came before it — the beneficiaries are you and me, not a handful of big private companies but everyone. For what will be an imperceptible increase on your electricity bill, you and your neighbours can profit from generating the energy that will save your community from climate change. And at the same time, you can stimulate jobs in your neighbourhood. In the end, the utilities might not be very pleased but the FIT really does democratise the energy market.

Can we justify the Feed-in tariff in an age of austerity?

The economy is a cause for worry for all of us these days. However, despite budgetary pressures on all the government services, the basic facts that the climate is changing and fossil fuels are running out won't disappear. We need the Feed-in tariff today if we have any chance of avoiding the horrors of a changed climate or the short-term reality that we can't generate all the energy we need from fossil fuels.

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Engensa solar installations, as featured in...