Feed-in Tariff for UK energy market must be the right FIT

Mar 24 2009fit6a1

Good Energy, the UK’s only dedicated 100% renewable electricity supplier, has revealed its analysis of the Feed-in Tariff models under consideration by the Government. A Feed-in Tariff or FIT is an additional payment made to renewable energy generators to boost the growth of renewable generation.

Good Energy has a wealth of experience working with small scale generators that the legislated Feed-in Tariff has been introduced to support. The company has been offering its own FITs for small scale generators through its HomeGen and SmartGen schemes. Good Energy pays above the market rate to customers who generate their own electricity for export. Good Energy is even rewarding customers producing renewable heat through Good Energy HotROCs – the UK’s first renewable heat incentive.

The report analyses six different potential models for a UK FIT. It assesses how they would work, how they would affect consumer choice and the possible cost implications to suppliers. Each model has also been assessed for compatibility with a ‘FIT Plus’ – this addresses the potential for generators to be offered a purchase agreement by electricity suppliers in addition to the payment offered by the FIT.

The analysis report lists all of the elements required for a Feed-in Tariff to be successful including:

•    The option for generators to trade on a free market
•    Power sales and renewable certificates remain accessible to suppliers
•    Customers with microgeneration can still switch suppliers easily
•    Suppliers supporting many microgenerators should not suffer financially

The analysis concludes that several of the models could be implemented in the UK although each has its strengths and weaknesses, most of which can be addressed in the final detail of the schemes’ operation. The choice should remain for those generators willing and able to take the commercial risk to opt for the Renewable Obligation, the UK’s current renewable energy financial support mechanism.

Juliet Davenport, CEO and founder of Good Energy said: “We fully support the Government’s plan to implement a Feed-in Tariff to support renewable development in the UK. However, we must ensure that any scheme is truly fit for purpose and stimulates rather than hinders the development of renewables. The chosen FIT must be simple for microgenerators to participate in, have widespread support from the energy industry, adapt to the existing market structure, and inspire electricity suppliers to offer competitive products.  Whichever model is chosen, we need to ensure that the principles outlined in the document do not get lost in the practicalities of the scheme operation.”

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Click to read the full FIT Report (PDF)