The FIT scam

It sounds fairly scammy that the government should pay people for generating solar power, far more than the electricity costs to generate or that any company can sell the electricity for. However, this is a government scheme to encourage uptake of microgeneration of electricity. There was a grants regime before, and this has replaced it. And the payback time is still likely to be over a decade - worthwhile, but you need to have a long view.

What is more of a scam is the electricity company role in this. The standard regime is that electricity that we generate and don't use we get paid 3p per unit for. The electricity doesn't bother metering it - they have decided to pay us for half the units we generate. The payment scheme for this is that they say they will pay us within 90 days of the end of the month on which the meter reading was taken. And herein lies the scam.

The next meter reading I do is due in June. Let's say I do it on June 1st. It will relate to the electricity I generated in March, April and May, which will amount to around 500 units, let's say - worth £200 of Feed-In Tariff payments. A significant proportion of this electricity will have fed into the grid - let's say half. That is 250 units that the electricity company doesn't have to incur costs to generate in March-May. But they don't have to pay for them until 90 days after the end of June - that is, the end of September. And when they do pay for them, they only pay 3p per unit. In the meantime, they will have billed and collected their standard rate for them - 12-13p per unit at the moment.

I hadn't put the numbers together when I had this installed just how good a deal it is for the electricity companies. Ours is already exploiting our direct debit scheme to ensure that they are almost always sitting on (and earning interest on) several hundred pounds of credit balance on our account. The companies pushed people to take up direct debit, on the basis of convenience, and a small reduction in charges - but if our experience is typical, they are probably sitting on, and earning interest on, several hundred million pounds of prepayments. Add to this the FIT scheme - it makes it clear that the main short-term beneficiaries of the scheme are not the people who have the systems installed, but the electricity companies.