The legislative framework for the tariffs was laid down in the 2008 Energy Act
Feed-In Tariffs were first introduced in Germany in the 1990s. They proved very successful and have made Germany one of Europe’s leading markets for wind and the best solar photovoltaics market in the world. Tariffs are now widely used in Europe and the prices have come down as the market has expanded and costs have fallen.
The campaign for renewable energy tariffs in the UK was led by the renewable industry association, REA and Friends of the Earth. Many other organisations also supported it. The Government at first resisted but soon after the new Department of Energy and Climate Change was created its Secretary of State, Ed Miliband, changed the policy. The tariffs were therefore enabled in UK law in the 2008 Energy Act.
There are all sorts of inter-relationships between the tariffs and other regulatory measures such as the Renewables Obligation, Carbon Reduction Commitment, Zero Carbon Homes and others.
Apart from the Renewables Obligation, some of these interactions are quite hazy. If you want more information, take a look at our FAQs which has further details, where available.
Our associate company, Ownergy, has taken the lead on this issue. Thanks to their intervention, the 2009 Pre-Budget Report confirmed that income from the tariffs would generally be exempt from income tax. You can read more about tax issues for the FITs on the Ownergy site’s page on tax exemption.
Corporate customers are likely to have to pay tax on tariff income but will be able to obtain relief on the cost of the systems as for other capital assets.