Feed in Tariffs. What is the feed-in tariff? Feed-in tariffs are payments made to homeowners and businesses for the renewable electricity they generate. Prior to April 2010 the main source of grants for householders was the Low Carbon Buildings programme. The final deadline for this was 31st March 2010. The feed-in tariff, introduced on 1st April 2010, guarantees that owners of small scale microgeneration systems will receive up to 41.3p for every kwh of energy generated for the next 25 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 41.3p per kwh of energy generated. You can also use the energy for free. The tariff is non-taxable and will increase in line with inflation. It applies for up to 25 years from the date of system installation. So for 25 years you will get paid for the electricity you generate. Overall you can expect around a 10% return on your investment. That means that if you invested 12000 in solar panels you'd be approximately 1200 better off per year. If you have money in the bank, you'll be lucky to get 1% on it at the moment. In order for your system to qualify for feed in tariffs, it must be installed by an MCS accredited installer. Pure energy systems is an MCS accredited installer. Guaranteed for 25 years - by the UK Government Once you sign up to generate your own energy, you lock in to the feed in tariff of 41.3p (index linked) for 25 years. So for the next 25 years - that's until 2035 - you will get paid 41.3p for every kwh you generate. 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. Pure energy systems is an MCS accredited installer. We will provide you with a certificate after the installation. You need this in order to sign up. What income can I expect? Installing a solar PV system gives three financial benefits: First of all, PV system owners are entitled to a 'generation tariff' for each kwh produced whether it is used or sold back to the grid. For small systems installed on existing roofs ('retrofit') this tariff is currently 41.3p per kwh. The amount of energy generated is measured by a 'generation meter' installed with the PV system. Tariffs vary with installation size as follows: Generation tariffs 1 st April 2010 31 st March 2013 Technology Scale Tariff level for new installations in period (p/kwh) [NB tariffs will be inflated annually] Tariff lifetime (Years) Year 1 1.4.10 to 31.2.11 Year 2 1.4.11 to 31.3.12 Year 3 1.4.12 to 31.3.13 Anaerobic digestion 500 kw 11.5 11.5 11.5 20 Anaerobic digestion >500 kw 9.0 9.0 9.0 20 Hydro 15kW 19.9 19.9 19.9 20 Hydro >15-100 kw 17.8 17.8 17.8 20 Hydro >100w-2MW 11.0 11.0 11.0 20 Hydro >2MW-5MW 4.5 4.5 4.5 20 MicroCHP pilot* 2 kw* 10* 10* 10* 10 PV 4 kw (new build**) 36.1 36.1 33.0 25 PV 4 kw (retrofit**) 41.3 41.3 37.8 25 PV >4-10 kw 36.1 36.1 33.0 25 PV >10-100 kw 31.4 31.4 28.7 25 PV >100 kw -5MW 29.3 29.3 26.8 25 PV Stand alone system 29.3 29.3 26.8 25 Wind 1.5 kw 34.5 34.5 32.6 20 Wind >1.5-15 kw 26.7 26.7 25.5 20 Wind >15-100 kw 24.1 24.1 23. 20 Wind >100-500 kw 18.8 18.8 18.8 20 Wind >500 kw-1.5mw 9.4 9.4 23.0 20 Wind 1.5MW-5MW 4.5 4.5 4.5 20 Existing microgenerators transferred from the RO 9.0 9.0 9.0 To 2027 Secondly there is the amount saved on the household electricity bill. With electricity prices running at around 13p per unit and set to rise this is a significant amount. Finally any electricity which you generate and don't use gets sold back to the grid. You get paid an 'export tariff' which is a minimum of 3p per kwh. Note that it pays to use as much energy as you can you are saving yourself around 13p a unit if you use it, compared to 3p if you export it. So put the washing on when the sun shines!
Sample income calculation A south facing 2.22 kwp (12 panel) PV system will produce approximately 1851 kwh each year. The income and savings expected can be calculated as follows: Feed in tariff No of units generated x tariff per unit 1851 x 41.3p = 764.46A Free energy Assume 50% of the energy generated gets used and assume the cost of buying this electricity would have been 12.8p per unit. The value of the free energy is: 50% x No of units generated x unit cost of electricity 50% x 1851 x 12.8p = 118.46B Exported energy The rest of the energy gets exported to the grid earning 3p a kwh: The value of the exported energy is: 50% x No of units generated x export tariff 50% x 1851 x 3p = 27.77C In total the value of the income and savings is given by A + B + C = 910.69 every year How long will it take for the system to pay for itself? The feed-in tariff is designed to make investment in renewable energy such as solar PV not only environmentally friendly but also financially viable. Pure energy systems PV installations should have paid for themselves within the first 10 years of their 25 year estimated life. Example Suppose a 12 panel solar PV system costs approximately 10,000. The income/savings in the first year are calculated to be 1000 Dividing the initial cost by the savings gives approximately 10 years. This means that the system will have paid for itself in 10 years. The remaining 15,000 generated over the remaining 15 years will be pure profit! Who could argue with that that isn t a great investment. In reality the payback period will be a bit shorter than this due to the fact that the income is inflation adjusted. 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. Systems that are installed at a later date will be entitled to a lesser amount (this is called digression). Only systems installed before 31st March 2012 will be entitled to the full starting rate of 41.3p per kwh. You lock in to the feed in tariff that prevails on the date you install your system. If you install a small domestic system on your house before 31st March 2012, you will lock in to the rate of 41.3p. Every year until 2035 or 2036 you will get paid a tariff of 41.3p per kwh generated. If you install the system after April 2012, the feed in tariff will be nearly 9% lower, at 37.8p. In this case you will earn 37.8p per kwh generated every year from 2012 to 2037.
Example of PV digression; Installation Date Up to 4kWp PV Generation Tariff 1/4/2010-31/3/2011 41.3 1/4/2011-31/3/2012 41.3 1/4/2012-31/3/2013 37.8 1/4/2013-31/3/2014 34.6 1/4/2014-31/3/2015 31.6 1/4/2015-31/3/2016 28.8 1/4/2016-31/3/2017 26.2 1/4/2017-31/3/2018 23.8 1/4/2018-31/3/2019 21.7 1/4/2019-31/3/2020 19.7 1/4/2020-31/3/2021 18.0 Note: Figures are as published by the government* and do not show any adjustment for RPI Can I pass my rights to receive FITs payments to somebody else? Entitlement to payments under the FIT scheme belongs to the legal owner of the generation equipment, however it is possible to 'assign' your rights to FITs payments to somebody else. To arrange this you would need to contact the energy company that makes the FITs payments and they will update the central database at OFGEM. It is worth noting that only the legal owner can request such an assignment and also that the legal owner can cancel this off the central database at any time without the consent of the other party. What if I sell my house? Entitlement to payments under the FIT scheme belongs to the legal owner of the generation equipment (i.e. whoever paid for the solar PV installation). The expectation is that during the sale of a house the generation station would also be sold at the same time, with the market compensating the seller with a higher sale price. Following this transfer, which would need to be supported by evidence such as a contract, the new owner's details would need to be entered onto the central FITs database. Entitlement to FITs payments would then transfer to the new owner. In theory it may be possible for the original owner to keep legal ownership of the PV system following the sale of the main property and retain the rights to the FITs payments. The practicalities of this may however be problematic. Somebody would still need to provide meter readings and the access requirements for this would need to be discussed. There may also be other legal considerations and easements to be drawn into the contract of sale and this would likely be more costly and troublesome than it is worth. Whilst it is expected that a solar PV system would add to the sale price of a property due to the fact that the scheme is so new there is little evidence on how much this increase might be. Specialist advice from an estate agent may be beneficial. What if I rent my house out to tenants? Entitlement to payments under the FIT scheme belongs to the legal owner of the generation equipment (i.e. who paid for the solar PV installation). Unless the landlord assigns the rights to the tenant (see "Can I assign my rights to receive FITs payments to somebody else?" above) the landlord is still entitled to the generation and export tariffs. The tenant would however get the benefit of the generated electricity they use and so get cheaper bills. In such circumstances the energy company can organise this payment to be processed separately to the actual import bill and can setup a correspondence address for FITs matters so that the landlord gets these letters directly. One thing to consider is that as the beneficiary of the FIT scheme you would need to supply your FITs provider with generation and export meter readings. If the tenant wanted to switch supplier it is still possible to stay with your FITs licensee although this may need to be discussed with them.
Can I install a system on my family/friends house and collect the FITs payments? Essentially yes. It is possible to have a situation where the legal owner of the generating equipment is not the legal owner of the property itself. As a prevention against fraud evidence of such an agreement (e.g. a contract) would be needed setting out the exact terms of the agreement. In this situation the legal owner of the generating system is entitled to all FITs payments. What if I already have a renewable energy system installed? The tariff you will receive depends on both the mix of technologies used as well as when each system is installed. If you have a different technology installed (e.g. you have a 3kWp solar PV system installed and you already have a wind turbine) your new system will receive the full tariff so long as it has a separate meter. If the technologies are both connected to the same generation meter then it is possible to get a pro-rated tariff code based on the capacities of each separate generator. If this is the situation then it may be necessary to speak to OFGEM directly. If you are installing more of the same (e.g. you already have a 2kWp solar PV and you have a 3kWp solar PV installed) then the gap between the two installs changes how the system is viewed. If the original system is not eligible for the feed-in tariff (or is on the 9p per kwh tariff) then the new system will be treated as a separate system and get the tariff based on the capacity of both systems combined. Taking the above example as the total capacity is 5kWp the tariff will be 36.1p per kwh. If the original system is eligible for the feed-in tariff and the new system is installed over a year later the new system is considered as separate to the original. In this instance the tariff level for the new capacity is based on the total capacity of both systems and so, taking the above example, will be set at the level of a 5kWp system (36.1p per kwh). Example 1: The original system is a 2kWp solar PV that was installed in 2005 and is not eligible for the feed-in tariff. A new 3kWp solar PV system is installed in August 2010. Outcome The original system will get no generation tariff. The new system will be considered a separate system and get the tariff based on the total capacity in this case 5kWp, i.e. 36.1p per kwh. Example 2: The original system is a 2kWp solar PV that was installed in late July 2009 and is currently claiming payments under the feedin tariff at the 43.1p per kwh tariff. A new 3kWp solar PV system is installed in August 2010. Outcome As the new system was installed over a year later it will be considered as a separate system. Assuming each system is separately metered the electricity generated by the original system will be paid at the rate of its existing tariff (in this case 41.3p per kwh) and the electricity generated by the new system will be paid at a tariff based on the total installed capacity i.e. as per a 5kWp solar PV at 36.1p per kwh. If the systems are not separately metered then the whole installation will need a custom pro-rated tariff code and some consultation with OFGEM will be required. Can I claim the feed-in tariff if my system is not connected to the electricity grid? Yes, FITs are payable for off-grid systems, however you cannot get the 3p per kwh export tariff. How sure can we be that the feed-in tariff will not be cut in the future? The government confirmed in the laws that bought the feed-in tariff into operation that the tariffs will be paid for 25 years for solar PV installations. Also the UK has challenging and binding carbon targets for 2020 and 2050 under various European agreements and so support for green energy is very unlikely to decrease.