Feed-In Tariffs (also known as FITs) are the electricity part of what some people call "Clean Energy Cashback", a scheme that pays people for creating their own "green electricity".
The tariffs have been introduced by the Government to help increase the level of renewable energy in the UK towards our legally binding target of 15% of total energy from renewables by 2020 (up from under 2% in 2009).
How do the Feed-In Tariffs help?
The solar PV generation tariff guarantees a fixed payment (usually paid quarterly) based on the size of solar PV system that is installed and the amount of power (measured in kWh) that the solar PV system is capable of generating.
Payments are guaranteed for 20 years and payment rates are index linked to inflation (using the Retail Price Index).
The Tariffs give three financial benefits:
- A payment for all the electricity you produce, even if you use it yourself
- Additional bonus payments for electricity you export into the grid
- A reduction on your standard electricity bill, from using energy you produce yourself
Read more about How the Tariffs Work.
Who are they for?
Broadly speaking, the FITs are for everyone, including households, landlords, businesses and even organisations such as schools and care homes.
Most forms of renewable electricity generation in all sizes up to 5 megawatts (enough for a large factory), which are supported by the Renewables Obligation. There is a whole chapter on eligibility with lots more information.
Solar PV feed-in-tariff generation rates
| Band (kW) | Proposed generation tariff (p/kWh) |
|---|---|
| Up to 4kW | 15.44p |
| Over 4kW up to 10kW | 13.99p |
| Over 50kW up to 150kW | 11.5p |
| Over 150kW up to 250kW | 11.0p |
| Over 250kW up to 5MW | 7.1p |
| Standalone | 7.1p |
Return on investment example, using the latest 15.44p per kWh tariff
Let's say that you live at a post code in Surrey and you are going to install a 4kw peak power system with 16 panels.
Take a look at the EU site, add your postcode (lets use GU16 7QR) and press search . Select the climate as "pvgis" in the radiation database option.
Add the installed peak pv power as 4 and press calculate. This will show that you should expect 3890kWh (Kilowatt Hours). This is equivalent to 1 KW for 3870 hours.
You will be paid the feed in tariff for this amount of power ie 15.4p x 3870 = £597.53 per year.
You will be able to use this power for your own use. If you use only half of it (i.e. 1935kWh, saving you 15p per kWh) then you also save £290.25.
The other 1935kWh you automatically sell back to the grid at 4.5p per kWh which equates to another £87.08p.
In total you have made £974.85 tax free at a 15% ROI.
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