The Feed In Tariff (FIT) was first introduced on 1 April 2010 under powers in the Energy Act 2008. It was originally designed to produce a return on investment of around 5%. The Treasury agreed a set of annual FIT budgets covering the years 2010 to 2015. However, any overspend in one year had to come from the following year's allocation. It soon became clear that return on solar PV investments would be much better than 5% resulting in the uptake in the first year being phenomenal. A summary from the the Solar Power Portal asserts that the budget for the year 2011-12 was set at £80 million but uptake was actually £89.6 million. Consequently, the DECC began a process of reducing the FIT returns in order to bring the uptake into line with what they had originally planned.

The effect of these changes was to bring down  the cost of PV hardware. This, in turn, enabled returns on investment for typical PV installations to stay in the 8-9% range, thus enabling solar PV to remain an attractive investment. This led the DECC to having another go at 'cooling' the demand for solar PV. After a public consultation, and a court challenge over the proposed timetable, the DECC finally brought in a sliding scale of returns which is actually linked to the uptake in a given three month period. This came into effect on 1 August 2012. The starting FIT rate began at 16p per kWh to be revised downwards every three months. (This can be six months if uptake is low.) The length of the scheme has been reduced from 25 years to 20 years. However, the export tariff has been raised from 3.2p/kWh to 4.85p/kWh. Payments will continue to be tax free and RPI linked.

A Summary of the Changes

The website www.fitariffs.co.uk has monitored and published FIT data for all types of renewable energy. The solar PV figures are summarised below.