FIT's payment - guaranteed... how, exactly?

[chasfromnorfolk]

Elsewhere in "General" I raised as an aside the prospect of FITs ending sometime before the oft-quoted 25 years. Not pleasant, I know.

I'm currently enduring surveys for my planned PV system and so far on a small sample of 2, 'every' surveyor, when challenged to a discussion of the guarantee has conceded that maybe, possibly, perhaps there might just be 'force majeur' in years to come that means the premature end of the scheme. Faced with the fact that my supplier is EDF  (French, last time I looked) and the infrastructure is owned by the Chinese I don't even have the reassurance of a good old-fashioned British Nationalised Company being involved anymore (not that it would be any better).

So, the power companies, perhaps lobbied by the overwhelming majority of consumers unable or unwilling to subsidise us, sometime in the future, simply says "sorry, can't do this anymore". Or it might be their shareholders, probably pan-European, Chinese, Indian.


The stats can be read either way: 44,000  FIT schemes registered is less than 1%  of households.

Would the power companies dump on us, secure in the  indifference/support of the 99%?
Is the FIT payment to a mere 1% sufficiently insignificant to make it unlikely they'd do that?

Either way, is there a guarantee worth the paper it's written on? The installers don't seem to think so... or should they have stood their ground?

Chas

[Ted]

The power companies could not act unilaterally to stop the payments. They have to follow government legislation.

But there is nothing to prevent a future government from changing things. Pretty much exactly this happended in Spain.

But the UK government are still trying to meet the EU target of 15% of all energy from renewables by 2020 and that is still a challenge. So I think any changes, especially retrospective ones, are pretty unlikely in the short term at least.

I do expect a fairly drastic cut in the current generous levels of tariff being paid to domestic PV systems, though, for new systems installed from next year.

[M]

Chas, I think you have to separate the probable from the possible.

Theoretically there could be a people power push, but why. I've been staggered to find that most people would like to think green and support renewables, as long as that is, it doesn't cost them much. Awareness of wind and PV is much higher than I expected. FITs is a small part of the green tariff, which in itself is a small part of our energy bills.

The government is under huge national and international pressure to grow renewables, and experiment on potential greener tech, so momentum is only going up at present.

The energy companies are largely irrelevant in this discussion, they simply administer the schemes as part of their licenses, there is no real profit/loss impact, so little to nothing to interest shareholders. Though it should be noted that a little greenwash goes a long way with shareholders, so a possible plus for FITs.

Given that,
man made CO2 concerns are not going to be proved nor disapproved in the short term (less than 10 years).
All governments are under renewables pressure.
Premature ending of FITs contracts would have embarrassing and legal ramifications for any government.
The FITs scheme has it's own annual in-built reduction schedule, (which may be accelerated).
Impact on bills low.
44,000 households is actually a substantial number and growing.
And no real public concern that I've ever heard of.

Can't see 25 years ahead, but worst case scenario, if the FITs system runs for 10 years, then most costs returned, plus lower future bills. I'm happy to take any 10 year bets!

I wouldn't worry, in fact, don't worry be happy now.

Martyn.

[wookey]

It only has to last 10 years for you to get your money back, which I reckon is a pretty good bet, and even if the scheme is prematurely ended, you'll still have done something useful in terms of greening up your bit of the planet (not as useful as insulating your house properly, but hopefully you'll be doing that too).

So yes, absolute guarantees are hardly ever available, but we have to achieve a low carbon economy _anyway_, incentives or not. Being an early(ish) adopter will likely get you a better deal than the people doing this in 10 or 20 years time.

[GavinA]

there's been enough government ministerial pronouncements regarding the guaranteed nature of the 25 year paybacks from FIT's to pretty firmly ensure a win in the courts for a class action against the government if they attempted to change this at a later date.

Not saying a future government wouldn't be daft enough to do it all the same though as politicians as a breed are fairly well renowned for their idiocy, but a few years later FIT owners should get their money back providing someone takes the government to court about it, which the big finance firms who've jumped on board will no doubt see to.

fact is though that the savings will be peanuts relative to the new fit claimants each year, for some time to come at least, so it makes more sense for governments to clobber them to claw it back. That said, I do doubt that it will remain tax free, or linked to RPI for the entire 25 year period, but that's just my gut instinct.

[dimengineer]

Another way of looking at the finances is that its just like buying a 25 year annuity at about 12%. If you have th emoney to spare, what's not to like?

My parents - now in their '70s have just done that, as they had the spare money and its a lot better than the 3.5% (or whatever) they could get elsewhere

TIm 

[chasfromnorfolk]

Another way of looking at the finances is that its just like buying a 25 year annuity at about 12%. If you have th emoney to spare, what's not to like?

My parents - now in their '70s have just done that, as they had the spare money and its a lot better than the 3.5% (or whatever) they could get elsewhere

TIm 

Ah...you see, dimengineer, that's goes to the heart of the grey area I'm trying to tease out... reassuring though they are, you'll note nothing in the replies above can really address 'how guaranteed is guaranteed' beyond "reasonably" because we're in uncharted territory.
I'm sure your parents are enjoying the novelty of being paid for their output, and long may it last - but with respect it's not like buying a 25 year annuity.
A 25 year annuity would be guaranteed under FSA rules and underwritten by the Bank of England (unless you bought it from Miracle Pensions Inc) and their FITs ain't. Similarly, your parents (like me) are old enough to have seen Bank/Building Society savings rates at considerably more than today's pitiful ones. And at the end of 25 years, if they didn't spend the capital, they would still have 25 grand. If they didn't spend all the interest, it would have compounded up.
After 25 years with their panels they'll have... 25 year old knackered panels.

It's a punt. It's a good punt. I'm just puzzled as to why the normally cautious and the fiscally aware are disinclined to see it that way... something to do with old rope and the certain shortage of it creating a guaranteed market for it, I reckon.

Chas

[baker]

 Hi
The ESB 9 cent /kwh will come to a end on 31 dec 2011
which means that their is no guarantee of a export payment here after
any ideas on how it will go for us?
baker  

[Justme]

And at the end of 25 years, if they didn't spend the capital, they would still have 25 grand.

If they didn't spend all the interest, it would have compounded up.

After 25 years with their panels they'll have... 25 year old knackered panels.

Unless they also dint spend the payments. Then they would have the £12k (come on no one pays £25k for a domestic PV install) & much much more due to the compounded interest. Lets compare like for like shall we....

Plus they would still have much reduced electric bills & possibly a payment for the exported power via a direct agreement with the util.

[dimengineer]

And at the end of 25 years, if they didn't spend the capital, they would still have 25 grand.

If they didn't spend all the interest, it would have compounded up.

After 25 years with their panels they'll have... 25 year old knackered panels.

Unless they also dint spend the payments. Then they would have the £12k (come on no one pays £25k for a domestic PV install) & much much more due to the compounded interest. Lets compare like for like shall we....

Plus they would still have much reduced electric bills & possibly a payment for the exported power via a direct agreement with the util.

I think they are working on the principle/assumption thats its pretty likely that in 25 years they will have shuffled off.....

[DominicJ]

There is nothing that could possibly stop the government passing a new law that abolished FiTs.

Anyone who believes they could take the government to court and win is living in a fantasy land.

How likely it is that the government will change FiTs, is impossible to predict.  In theory its an easy win, "I wont stand by as the rich profit from the poor", but since when could a politician add two and two and get four?

[StationHouse]

FITs are as safe as pensions 

Who knows what the future holds...

25 years is such a long time given the nature of our short term politics...

One thing that is clear to me is that as soon as they start to reduce FITs the domestic solar market will start to die as it is a completely pointless technology for the masses given the huge up front cost for such little return without FITs. 

[StationHouse]

Another way of looking at the finances is that its just like buying a 25 year annuity at about 12%. If you have th emoney to spare, what's not to like?

My parents - now in their '70s have just done that, as they had the spare money and its a lot better than the 3.5% (or whatever) they could get elsewhere

TIm  

Assuming the scheme does last for 25 years... What If you factor in roof repairs/system failures/new inverter at some point/poor summers/snow in winter/future removal of system/possible house sale. The money is spent and you can't get it back like a cash ISA...

[StationHouse]

Hands up how many of us would install PV if there were no FITs 

And... Why don't i get FIT payments on my outdoor solar powered lights   

[brackwell]

Not many.
But how many would buy the first of anything?
Some eccentric  might !

I know a lady who years ago, long before FITS, plastered her house with solar panels- cost £33K i believe.  She didnt care about the money (you cant take with you) she just thought it was something she should do!
These people made it possible for a sensible FITS rate to be introduced which in turn has brought the cost down dramatically.

In sunny climates we have already reached grid parity and the south of england can only be a few years away now. I wonder how many?

Ken