FIT feed in tariff increase for 2026

Krakkkers

I am aware there is some debate on whether increases will continue but its gone quiet.
Are there any updates on this?

QrizB

Krakkkers said:

I am aware there is some debate on whether increases will continue but its gone quiet.
Are there any updates on this?

The consultation has closed; now the wheels of Goverment turn at their own pace.

Edit to add link to consultation webpage:

https://www.gov.uk/government/consultations/feed-in-tariffs-fit-scheme-indexation-changes

Baldytyke88

QrizB said:

The consultation has closed; now the wheels of Goverment turn at their own pace.

I have emailed my MP about this, I will see what he says. My point to him was that this change would favour the energy companies and not ordinary people who have solar panels.

I also pointed out that the ONS recommends the use of CPIH, not CPI, so this change cannot be about modernisation, but favouring the energy companies.

I recommend others to email their MP.

NedS

Baldytyke88 said:

QrizB said:

The consultation has closed; now the wheels of Goverment turn at their own pace.

I have emailed my MP about this, I will see what he says. My point to him was that this change would favour the energy companies and not ordinary people who have solar panels.

I also pointed out that the ONS recommends the use of CPIH, not CPI, so this change cannot be about modernisation, but favouring the energy companies.

I recommend others to email their MP.

How does it favour the energy companies?

FiT payments are funded by the public through levies on our energy bills. A previous government made a contract with you, and now the current government wish to renege on it because they think it's getting / has become unaffordable. The current government pledged to reduce energy bills, and an easy way to achieve that is to pay you a little bit less, thus reducing the levies paid by all of us required to fund your payments.*

When I considered investing in FiT solar 15 years ago, one of my concerns was that the government could move the goal posts at any time. As it turns out, it would have been a great investment, so all I can offer you is that you haven't done too bad if they do decide to switch to CPI earlier than the previously agreed date. But lets be very clear that it is the government who are trying to screw you over so they can trumpet their success in reducing energy bills for hard working families, not the energy companies.

* Note payments will not actually reduce, just not rise as fast due to the proposed change in indexation to be used.

Baldytyke88

NedS said:

How does it favour the energy companies?

FiT payments are funded by the public through levies on our energy bills.

* Note payments will not actually reduce, just not rise as fast due to the proposed change in indexation to be used.

The Department for Energy Security and Net Zero also has a consultation option to freeze the FIT tariff until [say 2035] the CPI rate catches up – in reality this is retrospectively changing the rate that people were given.

Our bills were meant to have been cut by £150, but yet energy companies are making record profits, so I don't think this will favour the energy customer. Is the FIT rate higher than what electricity users pay for their energy?

QrizB

Baldytyke88 said:

Is the FIT rate higher than what electricity users pay for their energy?

It's not really reasonable to compare FIT payments to retail (or wholesale) energy costs. The FIT was an industrial stimulus package, designed to promote small-scale renewables and grow the UK supply chain for such things. FIT payments were set at a level that would let rooftop solar (etc) provide a similar return over the lifetime of the FIT to an equivalent conventional investment.

For example the total return on the FTSE250 since my PV was installed in 2012 is ~200%, just under 6% equivalent pa. The ~£8k we spent on our PV would now be worth ~£24k as a conventional investment. Meanwhile I'm carrying the risk of inverter failure, panel failure and so on.

The FIT export tariffs (there are two, 5.25p/kWh for older FITs and 7.39p/kWh for newer ones) are lower than the better open-market export tariffs and in the same ballpark as the average wholesale electricity price, although that average hides the complexities of half-hourly pricing.

FIT generation tariffs (which vary hugely) are not directly comparable to retail electricity prices.

There's a rather vocal forumite over on the Energy forum who insists on comparing the combined generation and export tariffs with the current import tariff, without understanding what the payments are for. Let's not go down that route here.

NedS

Baldytyke88 said:

NedS said:

How does it favour the energy companies?

FiT payments are funded by the public through levies on our energy bills.

* Note payments will not actually reduce, just not rise as fast due to the proposed change in indexation to be used.

The Department for Energy Security and Net Zero also has a consultation option to freeze the FIT tariff until [say 2035] the CPI rate catches up – in reality this is retrospectively changing the rate that people were given.

Yes, and I think you have a right to be upset about it. I can only assume this option was put forward to make the other option look relatively attractive (e.g, a bad option and a ludicrously bad option designed to make the bad option more appealing).

Baldytyke88 said:

Our bills were meant to have been cut by £150, but yet energy companies are making record profits, so I don't think this will favour the energy customer. 

Sorry, I don't see the implied link between our bills being cut by £150 and the profit energy companies are making. The government has never proposed cutting our bills by reducing or capping the profit that those nasty energy (utility) companies make.

Which company provides your energy? Please can you show me their market cap and profits over the last 5 years? I see smaller energy companies going bust but I do not see any evidence that energy companies are making huge profits from overcharging us for the price of gas or electricity, which would actually be rather difficult given Ofgem currently set a cap for the price energy companies can charge customers.
You say "yet energy companies are making record profits" like it's a bad thing. Is this just something you heard on the internet? Energy companies are businesses, and like any other business they need to make a profit, and over time those profits will naturally rise as inflation rises, so by definition all companies should be making record profits. If they are not then they are failing. Personally, I'd be worried if they weren't making record profits as otherwise they are likely to go bust and we will end up with even less choice as consumers, and as bill payers we end up picking up the tab for the failed companies (see the failure of Bulb as a recent example and see if you can figure out how much their failure has cost you). Given the capital allocation required and risks involved, I would consider 10% per year to be a reasonable return on investment in a non-growth industry such as this.

Baldytyke88

QrizB said:

It's not really reasonable to compare FIT payments to retail (or wholesale) energy costs.

Back in 2022/23 energy prices increased by 45%+ yet FIT payments only increased with RPI, energy price inflation has also been negative, but the energy companies are doing much better than energy customers.

So any talk of reducing FIT payments is unfair.

https://tradingeconomics.com/united-kingdom/energy-inflation

Shell PLC, they made a £21bn loss in 2020, since then they have been in profit each year, £20bn, £42bn, £19bn and £16bn; the share price has increased by 87% over the last 5 years, so they are doing ok.

gefnew

RPI increase is 4.2% for fit payments from April 26.

Krakkkers

Is it not still under review?

QrizB

gefnew said:

RPI increase is 4.2% for fit payments from April 26.

That's useful, thanks.

I guess we'll see the official announcement here (link below), in a month or so?

https://www.gov.uk/government/publications/feed-in-tariffs-fits-determinations

This assumes that the Government hasn't done anything rash following the consultation they held in the autumn.