One benefit of High Inflation? 5 August 2022 at 9:57AM edited 5 August 2022 at 11:08AM in Green & ethical MoneySaving 26 replies 763 views

jimjames

Seeing the BoE inflation forecasts yesterday made me think about the impact on the FIT rates paid which are based on December RPI. Last year was around 7% increase but from the forecasts it would seem that we're likely to be looking at 15% or more for RPI by December so next year could be quite a massive jump in the rates that are paid to well over 70p for the early adopters. Some small comfort if you get FIT payments that could partially offset the massive jump in energy bills along with the generated electricity from solar panels.

Heedtheadvice

You are quite right. Could be a significan jump in payments. Which I welcome.

It would however be far less than the price rise of power in general which will be three times that(a 200% increase ) on what was the typical cost last year!..........or more.

mickyduck55

Heedtheadvice said:

You are quite right. Could be a significan jump in payments. Which I welcome.

It would however be far less than the price rise of power in general which will be three times that(a 200% increase ) on what was the typical cost last year!..........or more.

We get paid even though many of use most of power we generate.. If FIT was  frozen for the next 14 years .. (the expiry of my contract) I would be content.. of course I am looking forward to to the uplift.

QrizB

When I installed my panels in 2012, the FIT payments were enough to cover my remaining gas and electricity bills on an annual basis ( running a surplus in summer, shortfall in winter).

That's still the case now, I think, with gas at 7.4p and electricity at 28p. Will be interesting to see how the rest of 2022 and then 2023 turns out.

Freepost

My Panels were install Nov'11 and from the start covered my energy use and water bills, not the case now, sadly I have to contribute a small amount.

Petriix

The real benefit of high inflation is for those who borrowed money to pay for money saving technology like solar panels. If you can pay it back when the money is of lower value then it effectively works out cheaper. ROI calculations for solar, batteries and EVs are looking better by the day. 

Chris_Type_R

I had wondered if it'd make sense at some point for the government to try and buy the early adopters out of their agreements. It might make sense in a number of cases - like for people wanting to move, or upgrade their panels to better performing panels. 

gefnew

Do not forget that the early adopters also have the contract for 25 years at RPI so they will reap inflation now for quite a few more years to come, any predictions what it could be ?.

jimjames

gefnew said:

Do not forget that the early adopters also have the contract for 25 years at RPI so they will reap inflation now for quite a few more years to come, any predictions what it could be ?.

They don't seem to be able to accurately predict inflation beyond the next month so pretty hard to know what it will be for the remaining years. But if the forecasts of 15%+ RPI in December are proved correct that will be a massive jump for FIT rates in April next year and obviously the rates compound so will be paid for every year left.

Chris_Type_R

jimjames said:

gefnew said:

Do not forget that the early adopters also have the contract for 25 years at RPI so they will reap inflation now for quite a few more years to come, any predictions what it could be ?.

They don't seem to be able to accurately predict inflation beyond the next month so pretty hard to know what it will be for the remaining years. But if the forecasts of 15%+ RPI in December are proved correct that will be a massive jump for FIT rates in April next year and obviously the rates compound so will be paid for every year left.

I'm in a position where I bought a house in 2015 which had solar installed in 2011 - one of my better accidental financial decisions - especially as at that time it did not really influence the purchase price

jimjames

Latest forecast for inflation in January is 21.4% for RPI. If it's even close to that in December then the FIT rate will leap from April.

Citigroup expects the retail prices index (RPI) measure of inflation, which is not classified as an official statistic, but is linked to rises in rail fares, air passenger duty, mobile phone tariffs and about a quarter of UK government debt interest, to hit 21.4pc next January.