Feed In Tariffs

Information on payments for renewable electricity in the UK. Now subject to change

Tariff spend estimates

The total tariff payments due can be estimated from the monthly registrations and installations

Spend estimates discontinued

We used to calculate the annual cost of the FITs based on the published statistics of deployment in each tariff band, as shown below.

The mechanism has, however, now become so complex in terms of the plethora of different tariff bands, and the frequency of degression, that the calculation has become too complicated to justify the effort involved. Therefore:

The figures below are historical, and will not now be updated for the reason given here.

Ironically, it is calculations like these which alerted the government to the potential cost of the scheme, and led to their response to add all the additional complexities (nothwithstanding the facts that government doesn't pay for it, and that the overall cost to consumers was very modest).

Spend against government limits

The annual tariffs which would typically be paid out, based on the estimated installed capacity at the end of March 2012, total about £370m per annum, subject to the assumptions below.

We highlighted back in November 2011 that the success of the scheme meant that the government needed to increase its so-called 'spending envelope' for the four years to 2015 totaling £867m. The government did subsequently increase the budget slightly to £1,064m. However the regulatory impact assessment for the Phase 2A review suggests that, on the government's central case, the spend could be as high as £2,160m.

These figures are shown here, followed by our estimates of the amount committed by existing FITs installations to March 2012, and projection of possible future requirements from then:

  2011-12 2012-13 2013-14 2014-15 4-year total
Annual spend estimates for the current spending review period - £m
Original 'spending envelope' [1] 80 161 269 357 867
Revised government budget [2] 94 196 328 446 1,064
Latest government projected expenditure [3] 170 540 660 790 2,160
Required spend on FITs systems now installed 148 370 372 385 [4] 1,275
Projected total including new installations 148 440 610 807 2,005
[1] First published in Phase 1 of the Comprehensive Review (paragraph 21 of the consultation)
[2] Increased budget assigned in December 2011
[3] In Phase 2B of the Comprehensive Review (Table 22 in the impact assessment)
[4] The impact assessment estimated this could be as high as £1,700m

Basis of estimates and assumptions made

 The spending estimates are based on the estimated timing when systems are installed (not when they are registered), because tariffs are payable from the commissioning date.

The following approach has been used:

* Points marked with an asterisk could be assessed more accurately by a more detailed analysis of the source data. This would take much longer, and we believe would lead to results which are not substantially different.

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