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How will cuts to FiT affect business energy prices?

savingsNew rates have been announced for the Feed-in Tariff (FiT) scheme for 2016 onwards including a 64% cut to the domestic tariff bringing down rewards from 12p/kWh to a measly 4.39p/kWh.

The subsidy cuts however were smaller than expected for small to mid scale solar, wind, and hydro projects, although plans for a £100m cap on the feed-in tariff incentive scheme remain in place. For small commercial projects, the new Feed-in Tariff rate will be 4.59p/kWh.

While this should come as good news to the renewables and solar industries, the news was still met with outrage and a series of complaints. Friends of the Earth renewable energy campaigner, Alasdair Cameron said:

“Massive public opposition to the government’s original proposal may have forced ministers to modify their plans, but this is still terrible news for the UK and its small-scale renewables industry. It’s outrageous that the government continues to hand out billions of pounds in subsidies every year to climate-wrecking fossil fuels, while trying to block the clean energy sources we urgently need to power our homes, hospitals and schools.

The good news is that the global renewable revolution is unstoppable, and the technology is advancing far faster than government thinking. But that will be scant comfort to the thousands of people whose jobs are under threat as a result of this short-sighted decision.”

Mr Cameron stated that an acceptable FiT rate would be between 7.92p/kWh-9.11p/kWh for domestic solar and 4.43p/kWh – 6.06p/kWh for larger commercial rooftop solar.

There are concerns over the government’s commitment to climate action in light of the recent Paris convention and the dwindling financial support for renewable energy development.

Energy Secretary, Amber Rudd however, defended her decision explaining that the cuts were required to keep consumer bills low and affordable.

“My priority is to ensure energy bills for hardworking families and businesses are kept as low as possible whilst ensuring there is a sensible level of support for low carbon technologies that represent value for money.

We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the cost of technologies come down, so should the consumer-funded support.”

While reduced subsidies may lower consumer energy bills in the short-term, a shortage of energy will only inflate prices when power reserves are called upon to fill the gap.

We’d advise businesses to lock in their contracts and protect themselves against future price hikes.

For more information regarding the effect of FiT changes on business energy prices or for a quote, give Business Juice a call on 0800 051 5770, email us at or use our contact form.

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