What is a Feed In Tariff?
On 1st April 2010 the Government introduced the Feed-in Tariffs (FITs) to encourage new investment in low carbon green technologies such as Solar PV, Wind Turbines and Hydro Generators units.
The Feed-In Tariff guarantees a minimum payment for all electricity generated by the system, as well as an additional payment for the unused electricity produced that can be exported to the grid, known as the Generation tariff and Export tariff respectively. These payments will boost household savings as bills will be reduced by using electricity generated on-site.
Under the FITs, anyone who installs an eligible Solar PV system will receive a guaranteed fixed payment for all the electricity they generate, including what they use, for a period of 25 years. They will also receive an additional payment for any electricity that don’t use that they feed back into the National Grid. To top it all off, people installing systems will also benefit from reduced electricity bills as they’ll effectively become their own power stations and so won’t need to use as much from electricity suppliers and the grid.
This means that there has never been a better time for you to install a Solar PV system. Not only will you be significantly reducing your carbon footprint, you’ll also be reducing your energy bills and getting paid to do it!
How are Feed In Tariffs paid?
Feed-in Tariffs are paid by electricity suppliers in one of two ways; either as a direct payment into your bank account or as a credit line to your energy bills. The latter may mean that if you generate more electricity than use you could stop paying energy bills altogether.
Although the FITs are a government initiative, the actual fund used to pay generators is paid into by electricity suppliers based on the proportion of the UK that they supply. Suppliers are recovering this cost through an increase in electricity bills to standard consumers, though this is estimated at only �3 extra per bill by 2016. This would be similar to the Climate Change Levy (CCL) currently added to UK energy bills.
How much will I be paid and what will I save?
The amount you are paid will depend on the size and type of system that you install as different technologies receive different amounts for different lengths of time. These payments are intended to give a certain percent return each year based on the initial cost of a system.
Solar PV has been given the highest rate of payment and so for the majority of people it is the best option. The exact amounts available for the different sizes of PV systems are detailed below:
These feed-in tariff rates are paid for each unit of electricity generated, even if you use it in your own house/building. In addition to this if you have any excess electricity it can be exported back to the grid and you will get an extra 3p/kWh. This export can be measured by having an export meter installed by your electricity supplier, but in most cases this will not be financially worthwhile and so a deemed export amount of 50% will be used.
The tariff is available to everyone – households, landlords, businesses and even communities and organisations like schools and village halls – and will be overseen by Ofgem which regulates the electricity and gas markets in Great Britain.
How much money could I receive?
The amount of money you receive depends on the type and size of the system you use to generate the renewable energy. The good news is that the biggest payments come with solar PV panel technology with as much as 41.3p per Kilowatt hour available – click here to see the official tariff levels table for all renewable energy technology.
As well as the payment you receive for generation, an extra 3p per Kilowatt hour of electricity produced that is exported to the grid will also be received, taking it to a total of 44.3p/kWh.
According to the Government, these tariffs should cover the initial cost of the installation of the technology with a return of up to eight per cent. With solar PV panels installed, that means you should earn back the capital costs of the installation two or three times over the duration of the tariff as well as making sufficiently reducing your bills You can calculate this using the Solar Guide Solar PV Feed-In Tariff Calculator.
When is the Feed-In Tariff available and for how long?
The Feed-In Tariff was opened and payments were made available on 1 April 2010. All systems that are eligible under the scheme now qualify for receiving the tariff. And the best news for anyone considering installing solar PV panels is that the tariff will be available for the longest period of time with this technology. Solar PV tariffs are paid for 25 years, while most of the remaining technologies will only benefit from 20 years of payments.
What limitations are there and am I eligible?
Anyone who installs a renewable electricity system with a capacity of five megawatts or less is eligible to receive the Feed-In Tariff. The five megawatt system can be used on a single property for a householder or business or used collectively by a community.
Solar PV isn’t the only technology that qualifies for the tariff – wind turbines, hydroelectricity, anaerobic digestion and micro-combined heat and power systems (Micro-CHP) all qualify too – but it is expected to be the most popular renewable alternative in the UK.
The tariffs available and the process for receiving them varies depending on when the technology was installed and if you followed the guidelines of using an installer certified under the Microgeneration Certificate Scheme.
