Energy: Microgeneration

House of Lords written question – answered on 6th April 2010.

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Photo of Lord Vinson Lord Vinson Conservative

To ask Her Majesty's Government what assessment they have made of the value for money for the public purse of the £8.6 billion estimated cost of the feed-in tariff scheme.

Photo of Lord Hunt of Kings Heath Lord Hunt of Kings Heath Deputy Leader of the House of Lords, House of Lords, Minister of State, Department of Energy and Climate Change, Minister of State (Department of Energy and Climate Change), Deputy Leader of the House of Lords

The FITs scheme is intended to encourage deployment of additional small-scale, low-carbon electricity generation, particularly by individuals, householders, organisations, businesses and communities who have not traditionally engaged in the electricity market. For these investors, delivering a mechanism which is easier to understand and more predictable than the renewables obligation, as well as delivering additional support required to incentivise smaller scale and more expensive technologies, were the main drivers behind the development of this policy.

The feed-in tariff impact assessment, published on 1 February alongside the Government's response to the summer 2009 consultation, reported on the benefits and value-for-money case for the scheme. The document is available on the DECC website at www.decc.gov.uk/en/content/cms/consultations/elec_financial/elec_financial.aspx.

The estimated resource cost of the policy, cumulative to 2030, is £8.6 billion. Resource costs are the additional costs to society as a whole of the policy-that is to say the additional cost of renewable generation incentivised by FITs relative to conventional generation (assumed to be gas CCGT). Costs to consumers on the other hand are the costs ultimately assumed to be borne by electricity consumers given that FITs will be funded by a levy placed on electricity suppliers. The estimated cost to consumers, cumulative to 2030, is £6.7 billion.

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