Feed-in Tariff
Grants & Tariffs | Grants | Renewable Heat Incentive
The Feed-in Tariff (FITs) is a policy the government is using to try and increase the use of renewable energy by providing a long term financial incentive for people to invest in renewable energy systems. It was introduced in April 2010 and once you join the scheme, payments are guaranteed for 25 years.
Under the scheme energy companies are obligated by the Government to pay a premium for electricity generated from renewable sources. The amount you are paid will depend on when you have your system installed. The tariff rate you get when you join the scheme is index linked and fixed for 25 years.
On 9 February the Government announced changes to the scheme which will come into effect from 1 April 2012. These changes are as follows:
- From 1 April 2012 PV systems will have to be installed on or attached to a building with an EPC rating of D or above in order to qualify for the full FIT. A valid EPC certificate will be required as part of applications for the FIT.
- For those installing 25 or more installations, tariffs will be 80% of the tariff for individual projects.
The published tariff rates for solar PV systems are as follows:
- Systems up to 4kWp (retrofit and new build): 21p /kW
- Systems from 4kWp up to 10kWp: 16.8p /kW
- Systems above 10kWp up to 50kWp: 15.2p /kW
- Systems above 50kWp up to 150kWp: 12.9p /kW
- Systems above 150kWp up to 250kWp: 12.9 /kW
- Systems above 250kWp up to 5MWp & stand alone systems: 8.5p /kW
* Please note, systems installed before 3rd March will be eligible for the higher pre-12th December 2011 rates until 31st March 2012, at which point the rate will change to the rates above for the remainder of the 25 year period thereafter
Tariffs will be inflated annually. The tariff levels for the electricity financial incentives (pence) are calculated to offer between 5-8% return on initial investment.
The Feed-in tariff is designed to generate an income in three ways:
- You get paid for all the energy that you generate (Generation tariff)
- You get an additional payment for any energy that is not consumed on site and sold back to the grid (Export tariff)
- You make a saving from not buying in the energy that has been replaced by the energy generated on site
For example...
Mr Green lives in Devon, he's interested in installing a solar Photovoltaic (PV) system. Currently he is importing electricity at 14.39p /kWh. His property has a South facing roof of 24m², which is big enough to install a 3.92 kWp system.
Mr Green’s 3.92 kWp system cost a total of £9,429 (including VAT @ 5%).
A 3.92 kWp system will have an estimated energy performance of approximately 3,365 kWh per year. This is according to Government SAP calculations. However, as we use higher rated modules and we are in the South of England, where we have a higher irradiation (1,250 kWh per square metre per annum compared to the standard figure of 1,000 kWh per square metre per annum, used in the SAP calculations), this system would actually deliver approximately 3,430 kWh per year.
Mr Green would therefore earn approximately...
Mr Green’s total annual earnings from his PV system would therefore be
£1,029
After 25 years he will have earned a total of
£25,729
After 9 ¼ years he will have made back the money he spent on the system
After 25 years Mr Green will have made a total profit of
£16,300
Mr Green is now producing his own renewable electricity, reducing his carbons emissions and making a good return on his initial investment. The introduction of the Feed-in tariff means that now, more than ever, it really does pay to be green!
See additional information on:
Grants & Tariffs
Grants
Renewable Heat Incentive
For further reading on the Feed-in tariff or ‘Clean Energy Cashback Scheme’ please go to www.fitariffs.co.uk
