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Feed-in Tariffs

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What is the Feed-in Tariff?fit_1.jpg

Feed-in tariffs are payments made to homeowners and businesses for the renewable electricity they generate.

The feed-in tariff, introduced on 1st April 2010, guarantees that owners of small scale solar PV systems will receive up to 4.03p for every kWh of energy generated for the next 20 years. If you read on you will get the fine print. If you haven’t got time this may be all you need to know:

  • You can receive a payment (tariff) from your electricity company of up to 4.03p per kWh of energy generated, whether you use it in your house or not. You can also use the energy for free.
  • The feed-in tariff is non-taxable and will increase in line with inflation (RPI).
  • It applies for 20 years from the date of system installation. So for 20 years you will get paid for the electricity you generate.
  • Overall you can expect around 6-13% return on your investment – if you have money in the bank, you’ll be lucky to get 2% on it at the moment. For a standard domestic 4 kWp system that is south-facing and costs £6,000, on average you would be around £500 better off per year, more if you can use the majority of the electricity produced yourself. 
  • In order for your system to qualify for feed-in tariffs, it must be installed by an MCS accredited installer. Spirit Solar Ltd is an MCS accredited installer.
  • In order to qualify for the full feed-in tariff, the building utilising the electricity from the grid must obtain an Energy Performance Certificate (EPC) rated D or above. The only exception to this is if the electricity feeds a building that cannot obtain an EPC (essentially not habitable) or if it feeds certain community buildings, including schools.
  • Please note that the feed-in tariff will be closed from 1st April 2019. However,  successful applicants before this deadline will receive the feed-in tariff for the next 20 years.

Click here to see some example returns on different systems

A return of 9% – better than any bank can provide  Ed Miliband, speaking in his former role as Secretary of State for Energy and Climate Change.

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Table of Tariffs

Note that the feed-in tariffs applying to new entrants to the scheme are scheduled to close from 1st April 2019.

Once you have installed a system, you continue to receive that rate for 20 years, adjusted for inflation. Only the rate applying to new entrants falls.

Current rates are as follows:

System Size / Type Feed-in tariff applying to systems installed from (p/kWh)
<10 kWp 3.79
10 – 50 kWp 4.03
50 – 250 kWp 1.69
250 – 1000 kWp 1.33
>1000 kWp 0.15
Standalone (not wired into building)* 0.05
Tariffs for building failing EPC 0.2
Export tariff 5.24
*A standalone system is an installation that is neither attached to a building nor wired to provide electricity to an occupied building. "Off-grid" systems that are wired to provide electricity to a building qualify for the same tariffs as grid-connected systems wired to provide electricity to buildings.

 

Reasons to go solar

  • Earn up to 4.03p per kWh for the next 20 years, just for generating electricity – tax free!
  • Use the energy you generate for FREE- if you are currently paying 15p per kWh for your electricity the value of the electricity you use from your system is worth 15p per kWh PLUS the tariff income. So for a small domestic system that’s 15p +  4p = 19p.
  • Sell any energy you don’t use back to the grid. The extra energy you produce can be sold back to the grid for 5p per kWh, making each exported kWh generated worth up to 5p + 4p = 9p to you.
  • Do your bit for the environment. We need to reduce our carbon footprint by roughly 40% by 2020. Renewable technologies are fundamental to this reduction.
  • Feel good! You’re making a better world for your children and grandchildren.

Guaranteed for 20 years by the UK Government…

Once you sign up to generate your own energy, you lock in to the feed in tariff rate that applies to your system size, index-linked for 20 years. So for systems of 10kW or less, 3.79p will be paid for every kWh you generate for 20 years – that’s until 2039!

…and it’s Tax free and Inflation proof

You pay no tax on the money you earn. If you’re a 40% rate tax payer, £1200 earned from solar panels is worth £480 more than the same amount earned from interest on cash deposits. So if you are comparing the income from the tariffs with that from another taxable investment you should look at the ‘post-tax’ income from the taxable investment. Both the generation tariff and the export tariff are index-linked to the Retail Price Index (RPI) so that they rise with inflation. The value of the energy used is also likely to increase as electricity prices rise. This means that your income will increase over the life of the scheme.

How do I claim the feed-in tariff?

In order to claim the tariffs you need to sign a “home generation” contract with an energy supply company. You should do this as soon as the system is installed. Ring up your electricity company and ask for their “home generation” sign up form. With some electricity companies – for example British Gas – you need to call them as soon as you know you are installing PV. Whoever your company is, we recommend you ring them as soon as you have an installation date, and ask them a) whether you need to pre-register and b) what their procedure is for signing up. All of the large suppliers offer home generation contracts and in most cases your existing electricity supplier should be able to sign you up. If your electricity provider does not offer the feed-in tariff, ring one of the big suppliers instead (e.g. E.on, nPower, SSE). There are also a number of smaller “green” suppliers that are offering FITs payments. 

Please note in order for your system to qualify for feed in tariffs, it must be installed by an MCS (Microgeneration Certification Scheme) accredited installer. Spirit Solar Ltd is an MCS accredited installer. We will provide you with a certificate after the installation. You need this in order to sign up.

Why invest now?

One of the aims of the feed-in tariff scheme is to encourage immediate investment in technology such as solar PV. Due to this the generation tariff offered is dependent on when the system is installed.You lock in to the feed in tariff that prevails on the date you install your system.

Further cuts could be coming

The government have committed to a more flexible system to be able to lower subsidies more quickly and without such lengthy consultation processes. The tariffs levels are scheduled to fall by 2-4% every 3 months, but are subject to review each time. In short, delaying could be costly!