Thursday, 26 July 2012

What does YOUR Feed-in-Tariff Payment cost consumers?

I'm delighted with my decision in June 2011 to install 14 PV panels on my roof. Partially, because I'm demonstrating my belief that our dependence on fossil fuels cannot continue, but mainly because I'm being rewarded at the same time by the feed-in tariff. 

Earlier this month I posted a piece reporting that FiT payments had now reached £128m Link to previous post. I made the point that the cost per consumer of supporting solar energy was a miserly 90p. The smallness of this figure surprised me at the time, but it came from a creditable source and I used the information to support my argument. However, further research has shown the picture is not quite as black and white as I originally suggested.


Seb Berry is head of public affairs for UK PV company Solarcentury, its website makes the claim that "Solarcentury is the UK's most experienced solar energy company." 
I picked up on Seb's statement that total paid out under the scheme is not far removed from the previous Labour government's initial projection of £107m after two years. Link to businessgreen article.

He added, "that as a result the scheme had cost consumers less than 90p per household."
I contacted Seb to enquire how he arrived at the 90p figure and he supplied the following information.
The 90p calculation is 90p per year (BusinessGreen edited the per year out). 
How can that be justified?  
DECC assume 26 m households and crucially don't forget that the levy is raised from all bill payers not just households ie all non domestic payers including all businesses, all public sector bodies etc etc.  The percentage of the total that falls on households is 36%.    
The £128m number over 2 years is taken from the Ofgem quarterly reviews.  So its £128m x 36% divided by 26m gives you total consumer cost of less than 90p per year for first 2 years of scheme and for all technologies.

Well he's quite right


£128,000,000.00 FiT Payments
X
36% percentage of domestic consumers
= £46,080,000


£46,080,000
÷
26,000,000 number of households in UK
= £1.77
÷
2 years (2010/2011)


= £0.89p per consumer, per year.




Hands up those of you that are aware of the impact that RO (renewable Obligation) makes on our electricity bills....No me neither.

The cost of RO is effectively paid by electricity consumers of supply companies that fail to present sufficient ROC's (Renewable Obligation certificates), whilst reducing the cost to consumers of supply companies who submit large numbers of ROC's, assuming that all costs and savings are passed on to consumers.
Basically, the company is fined by the government and passes the cost onto the consumer for using non renewable methods of generating electricity.

I have to thank 'Chrisso'  for his help in directing me to the Department of Energy and Climate Change report dated November 2011 Link to Government site. This states that the "average" household electricity bill is inflated by £18 each year to reflect the payments for FiT and the 'renewable obligation.' That's £1 for the FiT and £17 for the RO element.

So that's it. The official government site tells us that the cost to consumers isn't .89p it's £18...

Hang on though. Seb Berry made the very valid point that not all users of of electricity are domestic. 64% of all electricity is used by commercial organisations, schools, factories, shops, etc. I think it's perfectly reasonable to claim that every figure quoted above is true. 

Mark Twain made the statement: "Figures often beguile me, particularly when I have the arranging of them myself."

The reality is that we're ALL paying more than the wonderfully low 89p for subsidising alternative energy generation. Our taxes pay for schools and government buildings to be heated and lit and when we purchase goods in the shops the prices reflect the additional costs companies pay. Should we be moving away from fossil fuels? Should we use more nuclear power? Is it right that future generations will have to pay for our mistakes?

I think we have to pay up and look happy. I'd be interested in your thoughts.







Icarus 
Twitter: (@solaricarus)

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