What are feed-in tariffs?
Feed-in tariffs (Fits) are a government incentive scheme designed to support small to medium-size clean energy projects. Anyone with a registered installation gets quarterly Fits payments based on the amount of energy they produce.
These payments are guaranteed for 20 years, providing a reliable income that allows the installation owner to pay off their initial investment, and usually generate a small surplus.
For example, a school that raised £10,000 might install 32 solar panels which would generate over £1000 a year in feed-in tariffs (plus about £400 of energy bill savings).
Unlike most government programmes, Fits aren't funded through taxes – the big energy companies are forced to stump up for it, and they add the cost on to customers' bills.
Since they were introduced in 2010, Fits have helped people across Britain to plug nearly three quarters of a million small renewable projects in to the national electricity grid. Most of these have been rooftop solar panels – the UK's favourite source of energy.
You can find out more about feed-in tariffs and how they work on the government website.
What is the government proposing?
Though the government have announced lots of damaging changes to renewable energy support, Keep Fits is focused on their plans for the feed-in tariff, which they unveiled in a recent review of the policy.
The review itself was expected – governments regularly revisit these schemes to make sure they're fair.
What came as a surprise was the severity of the proposals: a cut of 80% or more for solar, and a third to a half off wind and hydro payments. On top of that, the government are suggesting a cap on the amount that can be spent on the scheme as a whole.
Other changes, such as the removal of the ability for community groups to 'lock in' tariffs at set rates in advance, only add to uncertainty. And the government is threatening more consultations or reviews in the future. In fact, they have threatened complete removal of the Fits scheme from January dependent on “events through the duration of the consultation”.
The government claims that these cuts are necessary to keep people's energy bills from rising too much, but their own figures suggest that the drastic changes will save the average household about £6 a year by 2020.
Their concern for billpayers is also applied rather selectively: local grid operators just added £7 onto everyone's bills for improvements to the power network, and we're on course to spend about £11 per person on supporting old coal and nuclear power plants by 2018 – to name just two examples. The decision to ignore these costs and single out clean energy is about politics, not money.
How are they justifying these changes?
These changes will massively reduce the amount of clean energy that gets built in the next few years.
It's important to note that these changes won't impact clean energy projects that are already up and running. This is about the future.
The government's forecasts say that these cuts will more than halve the amount of clean energy that gets built between now and 2020, delivering 40% less carbon savings than if they'd left the scheme intact. With work drying up, it's predicted over 25,000 jobs will be lost in the solar industry alone.
Wind and solar costs have fallen far enough that a few large commercial projects might still happen. They can reach the economies of scale needed to make the numbers add up – just about.
It's smaller projects – the ones that ordinary people and communities can get involved in – will be hit the hardest. The new wave of solar powered schools, renewable villages and hydro-powered pubs that we would have seen are unlikely to materialise.
We'll see a surge of projects over the next few months as people race to meet the deadline, but if the changes go through there'll be very little happening after that.
What impact will this have?
What is the consultation?
Government are obliged to invite comment and evidence on the impact of their changes.
Their official consultation form was a whopping 32 questions long and included such gems as:
"Do you consider it appropriate to harmonise the triggers for contingent degression across all technologies"
We don't think it's right that you should need to be an expert to have your say in all of our energy future. So, working with 38degrees, we made a simple online tool that made it easy to share your comments.
And thousands of you did. The consultation closed at 11.45pm on 23rd October by which time over 10,000 of you had told government what you thought of their plans. Now we wait to see if they listened.