The total tariff payments due can be estimated from the monthly registrations and installations
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).
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:
|Original ‘spending envelope’ ||80||161||269||357||867|
|Revised government budget ||94||196||328||446||1,064|
|Latest government projected expenditure ||170||540||660||790||2,160|
|Required spend on FITs systems now installed||148||370||372||385|| 1,275|
|Projected total including new installations||148||440||610||807||2,005|
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.