Tarrifs Indexed Linked

Pipsaholic

Hi,

Am i correct that the FIT tariff for solar pv and the export tariff are linked linked so basically that means if we come out of a recession and the economy grows we will get more money and if we fall into another recession the tariff will get cut?

How on earth did the tariff go from 43p to 14.38p in less that 4 years? Was it the tories?

Thanks.

neilball

The FIT payments have run in tranches over several years - when first launched the rates were high but so was the cost of the installations (roughly 3 times what they cost to install currently). So as costs came down so have the FIT rates, so that the rate of return on investment and simple payback periods remain e same until the costs of the installation have been recovered. At the same time the total period for FIT payments has reduced too - it started off as a 25 year period, and has since dropped to a 20 year period. FIT payments are being used to stimulate demand for the industry which would otherwise not be economic for most customers. As the industry becomes more successful and economies of scale bring down costs then the subsidy is reviewed and reduced accordingly.

And yes, the FIT payments are index linked so increase every year. Unless the index slows to zero then there will always be an increase. I've not looked at the small print, so if we were to end up with deflation rather than inflation I'm not sure if the payment rate would be reduced or simply not increase that year. As we've no current prospect of deflation in the UK then I'm not worrying about it