Feed-in Tariff

Grants & Tariffs | Grants | Renewable Heat Incentive


The Feed-in Tariff or ‘Clean Energy Cashback Scheme’ is a policy the government is using to try and dramatically increase the use of renewable energy by providing a long term financial incentive for people to invest in renewable energy systems. It is being introduced in April 2010 and is 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 feed in tariff rates are set for the first two years but are set to reduce year on year after that. This is to try and encourage people to get their systems installed sooner rather than later. The set amount you are paid for generating renewable electricity over the duration of the feed in tariff will depend on when you join the scheme.

For example, if you were join the scheme in its third year (1st April 2012 – 31st March 2013) by having a 3.96kWp system retrofitted, you would be paid 37.8p per kW for every kW generated for the next 25 years from the date you sign up to the scheme.

The published tariff rates for solar PV systems are as follows:

Year 1 & Year 2 (1st April 2010 – 31st March 2012)

  • Systems up to 4kWp (retrofit): 41.3p /kW
  • Systems up to 4kWp (new build) : 36.1p /kW
  • Systems from 4kWp - 10kWp: 36.1p /kW
  • Systems from 10kWp - 100kWp: 31.4p /kW
  • Systems from 100kWp - 5MW: 29.3p /kW
  • Stand alone systems (non-grid connected): 29.3p /kW

Year 3 (1st April 2012 – 31st March 2013)

  • Systems up to 4kWp (retrofit): 37.8p /kW
  • Systems up to 4kWp (new build) : 36.1p /kW
  • Systems from 4kWp - 10kWp: 33p /kW
  • Systems from 10kWp - 100kWp: 28.7p /kW
  • Systems from 100kWp - 5MW: 26.8p /kW
  • Stand alone systems (non-grid connected): 26.8p /kW

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:

1. You get paid for all the energy that you generate (Generation tariff)

2. You get an additional payment for any energy that is not consumed on site and sold back to the grid (Export tariff)

3. You make a saving from not buying in the energy that has been replaced by the energy generated on site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 14p /Kw. His property has a South facing roof of 24m², which is big enough to install a 3.24Kwp system.

Mr Green’s 3.24kwp system cost a total of £14,000 (including VAT @ 5%).

A 3.24Kwp system will have an estimated energy performance of approximately 2,700 kw per year. This is according to Government SAP calculations. However, as we use the higher rated monocrystalline modules and we are in the South of England, where we have a higher irradiation (1,250kW per square metre per annum compared to the standard figure of 1,000kW per square metre per annum, used in the SAP calculations), this system would actually deliver approximately 3,038 kW per year.

Mr Green would therefore earn approximately...

£1,254.89 for the total amount of renewable electricity that the system generates, regardless of whether you use it or not (41.3p x 3,038kW). The system will be installed with a total generation meter which your electricity supplier will read to give you your solar rebate
+
£340.31 in savings made through not having to buy electricity, supposing that Mr Green uses 80% of the energy generated by his PV system. This assumes that electricity is bought from the grid at 14p /Kw. As energy costs rise, this saving will become even greater.
+
£18.23 from selling excess energy back to the National Grid. When the system is generating energy and there’s no demand in the house the electricity automatically flows back to the grid. This is measured on an export meter and assumes that Mr Green sells 20% of his electricity back to the grid at 3p /Kw.

 

Mr Green’s total annual earnings from his PV system would therefore be
£1,613.43.

After 25 years he will have earned a total of
£40,335.72

After 8.5 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

£26,335.72

 

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

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