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:
“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.
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 – 50 kWp||4.03|
|50 – 250 kWp||1.69|
|250 – 1000 kWp||1.33|
|Standalone (not wired into building)*||0.05|
|Tariffs for building failing EPC||0.2|
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!
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.
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.
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.
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!