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Market Monitor – Feed-in Tariff Component of U.K. Electricity Bills Set to Increase

Feed-in Tariff Component of U.K. Electricity Bills Set to Increase in the Coming Months

One of the non-commodity components of U.K. electricity bills is set to increase in the coming months.

The Feed-in Tariff or FiT charge relates to funding for renewable energy sources across the country and those associated with solar programs are likely to be significantly higher than the £0.008/kWh witnessed last year.

A bright and sunny spring has solar production much higher than normal, which might be viewed as a good thing as it helped us shift supply away from resources like coal for extended periods of time, but it comes at a price.

That increased solar production, a result of both sunnier days and more solar panels installed under the FiT program, means more solar MWh receiving the FiT payments. Those increased payments to solar owners translate into higher costs for all electricity consumers. Amplifying the impact this spring is the decreased overall usage that we have witnessed as a result of Covid-19 based restrictions.

Essentially we will have more pounds being paid out to solar owners and fewer kWh of consumption to divide the costs across. Customers who are enrolled under contracts that allow for the pass-through of FiT costs could see those charges increase from historical levels of less than a pence to nearly a pence and a half, and in some models they could represent as much as 5% of the total cost of electricity in the coming months.

As you receive your invoices in the coming months reach out to your energy adviser or contact us for help walking through these increases, but you may want to start budgeting for them now.

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