Feed-in Tariff

Feed-in Tariffs (FITs) became available in the UK on 1st April 2010. Under this scheme energy suppliers make regular payments to householders and organisations that generate their own electricity from renewable or low carbon sources such as solar PV or wind turbines.

It guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to any savings the system makes by using the electricity generated.

Once microgeneration technology has been installed, you should experience a monthly reduction in your energy costs. You will then receive an income from your Feed-in Tariff - clean energy cash back provider. Use the cash back calculator to see how the payback could work for you.

The scheme covers the following electricity-generating technologies, up to an installation size of 5 Mega Watts:

  • Solar electricity (PV) (roof mounted or stand alone)
  • Wind turbine (building mounted or free standing)
  • Hydroelectricity
  • Anaerobic digestion
  • Micro combined heat and power (mCHP) (limited to a pilot at this stage)

The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS* scheme. See below for further details.

You will qualify for the full FIT payments if:
The technology was installed between 15th July 2009 and 31st March 2010 and you transferred to FITs before 1st April; OR It is installed after 1st April 2010 using an MCS* certificated product and installer;

* The Microgeneration Certification Scheme (MCS) is an independent scheme that certificates microgeneration products under 50kW and installers in accordance with consistent standards.


How the scheme works

If you are eligible to receive the FIT then you will benefit in 3 ways:

1. Generation tariff – a set rate paid by the energy supplier for each unit (or kWh) of electricity you generate. This rate will change each year for new entrants to the scheme (except for the first 2 years), but once you join you will continue on the same tariff for 20 years, or 25 years in the case of solar electricity (PV).

2. Export tariff – you will receive a further 3p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn’t used on site. The export rate is the same for all technologies.

3. Energy bill savings – you will be making savings on your electricity bills, because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.

Deemed export
Domestic FIT installations are likely to have their export deemed (estimated) at 50% in most cases until smart meters are rolled out.

Example of how the Feed-in Tariff works



As an example, a typical domestic solar electricity system, with an installation size of 3 kWp could earn around:

  • £1,000 per year from the Generation Tariff
  • £36 per year from the Export Tariff
  • £140 per year reduction in current electricity bills.

This gives a total saving of around £1,200* per year.

* Based on a 3 kW system installed on a south facing, 45 degree, roof with little or no shading and annual solar radiation of 989 kWh/year. This assumes 50% of the electricity generated is exported. The figure may vary depending on how much is exported.

Is solar electricity suitable for my home?
Solar panels generate electricity in daylight - even when the sun isn’t shining. To check whether solar electricity is right for you here are a few questions:

Do you have a sunny place to put it?
You'll need a roof or wall that faces within 90 degrees of south and isn't overshadowed by trees or buildings. If the surface is in shadow for part of the day, your system will generate less energy.

Is your roof strong enough?
Solar panels are not light and the roof must be strong enough to take their weight, especially if the panel is placed on top of existing tiles.

Do you need planning permission?
In England and Scotland, you don't need planning permission for most home solar electricity systems, as long as they're below a certain size and do not protrude more than 20cm from your roof - but you should check with your local planning officer if your home is a listed building, or is in a conservation area or World Heritage Site. You should also check if your building is subject to any covenants.

In Wales and Northern Ireland, you still need to get planning permission before installing a solar electricity system - though the legislation may soon change. To find out how to apply for permission, contact you local authority.


Cost, savings and maintenance

So what will it cost?

The payback period for most solar PV systems should be within 5 to 7 years. To install a system will be from £4,999 subject to the number of kWs your system can produce.

But you will be able to make considerable savings - almost 1 tonne of CO2 a year, and around £200 off your electricity bill*. So an average household with a 4 kW system could generate enough power to cover a whole year’s electricity.

Maintenance
is generally small - you'll need to keep the panels relatively clean and make sure trees don't begin to overshadow them.