Financial support for energy saving and generation

There are government schemes offering financial support for saving energy, using renewable sources and for generating green electricity.  The schemes have changed and will continue to change so it is always essential to find up to date information before committing to expenditure if you wish to take advantage of support.  For that reason no figures are given here for payment levels.

The Feed-in Tariff

Important update – September 2018

A few months ago we noted that the Feed-in Tariff scheme is planned to come to an end for new applicants on 31st March 2019.  The Government consultation on the ending of the Feed-in Tariff scheme has just ended.  While it was known that closure of the FiT scheme was coming it was a surprise to find that there is also a proposal to end export tariffs.  If you are considering a PV system or other renewable electricity technology we suggest you read the YouGen article on How the Feed-in-Tariff ending in April 2019 could affect you and the ofgem FAQ: Announcement on Prospective Scheme Closure and then act fast to complete your installation before the deadline.  However it is vital to note there is a cap on the funds available for each technology as explained in the ofgem FAQs so some installations could end up without any funding.

The Feed-in Tariff has supported renewable electricity generation since 2010. The funding comes ultimately from electricity consumers.  Payments are made to generators per kWh (unit of electricity) generated regardless of whether the electricity is used on site or is exported to the grid.  For householders the most relevant technology is Solar Photovoltaics (PV) but the same scheme also supports wind turbines, hydroelectricity, anaerobic digestion and micro combined heat and power (CHP).    Payments are made from an electricity company; most people choose the same company that supplies their electricity but it could be a different one.  In addition to the Feed-in Tariff an export tariff is also paid.  For domestic installations it is deemed that the electricity exported is half that which is generated so the export tariff payments are made on that basis.  Once payments commence they will be made for 20 years and will rise in line with inflation (the RPI, retail price index).

The Feed-in Tariff is designed to support the renewable energy industry in its early stages of development so payments fall in response to the number of installations and falling capital costs.  For most technologies degression is once a year but for PV it is once a quarter.

Official information on the FiT scheme can be found on a page of the ofgem website, but there is a very useful page on the Feed-in Tariff on the YouGen website.  The page gives more details of eligibility and how the scheme works with a long list of FAQs.  Up to date Feed-in Tariff rates can be found in the Ofgem tariff tables.

YouGen has an article on How the Feed-in-Tariff ending in April 2019 could affect you.  Whether or not it will be replaced by a similar scheme is unknown. If you are already receiving FiT payments you will continue to do so but if you are planning a PV or other system it will need to be installed before the end of March 2019.  It is worth noting that installers could be very busy as the end approaches so going ahead earlier will be a good idea.

The Renewable Heat Incentive

The Renewable Heat Incentive (RHI) is a scheme to give financial incentives to householders, businesses and communities to adopt renewable heat technologies.  The Domestic RHI scheme for homes gives support for three technologies:-

Payments are linked to the heat demand met by the installation (no metering is required) and are made for 7 years with links to inflation (RPI).  There is a degression system similar to that mentioned above for the Feed-in Tariff under which payments will be reduced in line with the number of installations supported by RHI.  There is also a non-domestic RHI scheme that covers a wider range of technologies and does require metering of the heat supplied.  Payments are made for 20 years.

The YouGen website page on the Renewable Heat Incentive is a useful source of information on both the domestic and non-domestic versions of the scheme,  Full details of the scheme, tariff rates and the application forms are available on ofgem pages for domestic RHI and non-domestic RHI.

Energy Company Obligation

ECO is a Government programme to make houses in the UK more energy efficiency, also aiming to cut carbon emissions and reduce fuel poverty.   Grants may be available for new boilers or for insulation but only for householders in receipt of benefits. However the list of relevant benefits is a long one including Child Tax Credit and Working Tax Credit, so many people will be eligible.

It is not easy to get up to date information from Government websites.  The Ofgem site at www.ofgem.gov.uk/environmental-programmes/eco is not easy to use and may not tell you what you want to know.  There are some details on the websites of all of the major energy supply companies (those with more than 250,000 household customwrs) as they fund the scheme.

The independent consumer body Which? has a useful web page that introduces the ECO scheme at www.which.co.uk/reviews/home-grants/article/home-grants/energy-company-obligation-eco

Boiler Grants is a website owned by a media company that has funding from ECO to promote the scheme. It offers an online form to check eligibility for grants and arrages home visits from qualified surveyors to approve the grants.  Grants cover replacement costs for gas, oil or LPG boilers that are more than 8 years old, but as of August 2017 funding for gas boiler replacements is very limited.  The scheme also covers insulation.

The Green Deal

The Green Deal is a loan scheme to cover the costs of energy efficiency improvements that will result in lower energy bills with savings greater than the costs of the improvement measures (the ‘golden rule’).  Repayments are made via a charge on the home electricity bill at a fixed rate of interest.  If a householder moves the new owners or tenants will pay the charge as they will continue to benefit from lower bills.  There were many Green Deal Providers of insulation and a variety of renewable technologies that could be financed under the original version of the scheme but it collapsed in July 2015.  There is likely to be a lot of out of date information available on the Internet.

The assets of the Green Deal Finance Company that backed the loans under the original scheme were acquired by new owners in January 2017.  The company began financing loans again in May 2017, working with a small number of selected Green Deal Providers.  The initial focus is on replacement boilers but finance is also available for insulation, ground source heat pumps and air source heat pumps.  The new scheme is being ‘soft launched’ with minimal publicity.  Gradual expansion in terms of the number of providers and the range of technologies should ensure stability of a potentially very useful scheme.

Independent advice on how the new scheme works and its benefits can be found on the YouGen website page on the Green Deal.  To find out more and to strat the process of applying for a loan visit the website of the Green Deal Finance Company.

Follow this link to return to the main ENERGY page