In the run up to Christmas, Ofgem published its latest report on the Feed-in-Tariff (FiT) scheme. Despite falling electricity generation, payments under the scheme reached a record £1.84 billion, and the total cost of the scheme reached £1.86 billion. This article walks through the key statistics from the latest report.
Feed-in-Tariff Generation
Solar power makes up nearly 99% of the number of FiT installations and over 79% of installed capacity. Ofgem does not provide a breakdown of actual generation by technology, but we can safely assume that solar produces the bulk of output. As Figure 1 shows, generation fell by 6.3% to 8.34 TWh in FY 2023/24.
It appears that generation under the scheme peaked in the year ending March 2021 and is now on a gentle glide path downwards. This may be due to around 467 installations becoming inactive since 2021/22. However, even though the FiT scheme has been closed to new entrants for some time, 928 new installations have been accredited in the same period. It seems that the older installations are slowly degrading and producing less each year.
Feed-in-Tariff Payments
Payments under the scheme are split into three elements. The largest element was £1,762 million paid for generating electricity. An additional £78 million was paid for electricity exports, and a further £18 million was paid to licensees for administering the scheme. As shown in Figure 2, the total value of the scheme increased by 7.2% to £1,858 million, a new record. This is the equivalent of about £65 per household. These charges disproportionately impact the poorest in society and benefit the rich who could afford to put solar panels on their roofs.
The total cost of the scheme has now reached £16,389 million since its inception. Interestingly, the second-largest licensee under the scheme is Good Energy, which paid out a total of over £260 million in 2023/24. This means that Good Energy is probably one of the largest recipients of the FiT administration fees. By pure coincidence, I am sure, the CEO of Good Energy is Nigel Pocklington, who just happens to be the brother of Jeremy Pocklington, who is the Permanent Secretary at DESNZ.
Cost of Feed-in-Tariff Generation
As shown in Figure 3, increased payments coupled with reduced generation has meant that the cost per MWh of generation has soared.
The total cost of generation (generation plus export) rose by 14.5% to £221/MWh. This is because the FiT payments are index-linked and increase each year in line with the Retail Price Index. The average payment peaked at £310/MWh in 2012/13, then fell to £174/MWh in 2019/20 as new installations attracted lower subsidies. However, now that very few new installations are coming online, prices are rising and are now higher than at any point since 2014/15.
This latest cost per MWh compares to the cost of currently active Contracts for Difference (CfDs) for offshore wind at about £150/MWh, onshore wind at £113/MWh and solar at £110/MWh. The average market reference price so far this financial year is about £69/MWh. We are being forced to pay more than three times the market rate for uncontrollable, mostly solar power.
Conclusions
We can expect the cost of the Feed-in Tariff scheme to continue at very high rates for the foreseeable future. The duration of FiT contracts is 20-25 years, and if the rate of inflation stays above the rate of decay of generation, the overall cost will continue to increase.
However, we can expect the cost per MWh of generation to keep rising, and we will continue to pay over the odds for electricity until the country goes bust. We really need our politicians to prioritise cheap energy over almost everything else instead of signalling their green virtue on the world stage.
David Turver writes the Eigen Values Substack, where this article first appeared. He will be giving a Sacred Cows talk on January 28th in London entitled “Net Zero: Why the cure is worse than the climate change disease”. More details and ticket details can be found here.
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This latest cost per MWh compares to the cost of currently active
Contracts for Difference (CfDs) for offshore wind at about £150/MWh,
onshore wind at £113/MWh and solar at £110/MWh. The average market
reference price so far this financial year is about £69/MWh. We are
being forced to pay more than three times the market rate for
uncontrollable, mostly solar power.
Is it technically possible for the unscrupulous to take (cheaper) electricity from their electric supply straight into their “solar setup” and feed it back to the grid (at 2-3 times the price) – and thereby boost their feed in tariff returns?
Nice idea, but in theory there should be an Ofgem meter linked only to the renewable output. Also, any particular power generator has a reasonably predictable output, so large variations should be easy to detect – if anyone is paying attention…
Speak to any electrical engineer in the power supply field. “Feed in” power from roof tops is worse than useless to power generators.
Roof top solar elevates the cost of balancing the grid big time and people wonder why every 3 months the standing charge goes up.
It’s a blatant transfer of wealth from “the peasants” to Globalists and those in the British Establishment.
When it looks like a scam; smells like a scam and has all the hallmarks of a scam, it usually is a SCAM.