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Our information below outlines the UK Solar PV Feed in Tariff and the costs involved.
The UK Solar PV Feed in Tariff Scheme
The feed in tariff is a new scheme announced by the Government on February 1st 2010 to reward homeowners for generating clean renewable electricity. Homeowners who have a solar electric PV panel system installed from July 2009 onwards will benefit from the scheme and start earning returns from April 1st 2010.
1. Purpose of the scheme.
Renewable electricity is an alternative form of electricity generated from sources that releases much less CO2 into the atmosphere. A barrier to generating renewable electricity yourself can be the very high up front costs. To encourage more people to generate their own electricity the Government has created the Clean Energy Cash Back Scheme (or Feed in Tariffs). This creates an opportunity for everybody to become electricity generators. The scheme exists in Scotland, England and Wales but does not run in Northern Ireland.
Encourage more renewable electricity generators
2. Description of the scheme
The Feed-in Tariff (FIT) guarantees you a minimum payment for each unit of electricity you generate from renewable sources. This means that anybody that wishes to invest in buying and installing eligible technologies can be confident that the cost of their investment will be recovered. The name comes from the German system where generators were given a fixed price for every unit of electricity they exported to the grid. In the UK the Government calls it the Clean Energy Cash back Scheme. The scheme is different from the German scheme because in the UK (currently excluding Northern Ireland) the generator is paid for every unit they generate, even if they use all the electricity themselves (the generation tariff. If the generator does export electricity to the grid they will be paid an extra tariff on top of the FIT (export tariff).
You are paid for every unit you generate &
extra for selling unused units back to the grid
3. Length of the scheme
The FIT will last 20 years for all eligible renewable electricity generators, and 25 years for solar photovoltaic (PV). The FIT will be index linked so it will increase each year by the rate of inflation (RPI). The scheme will be reviewed every 5 years and due for the first review in 2013. The tariffs will be reviewed annually (from 2012) to ensure the tariff rates provide the correct rate of return. Generators who install systems between 15th July 2009 and 31st March 2012 will receive the current tariff. After 31st March 2012 new installations could receive a lower tariff (see 8.2, degression). This new tariff will be guaranteed for the full length of the scheme (20 -25 years) from the installation date.
Payments are guaranteed for 20 years (25 years for PV)
4. Eligible technologies
The table below shows the main technologies that are eligible for the FIT and covered by the REAL Assurance Scheme and how much you will earn if your system is installed between 15 July 2009 and 31 March 2013. (Note: Tariffs will increase with inflation annually).
*FiT for MicroCHP is a pilot scheme, limited to the first 30 000 installations.
** For information on systems installed before 1st of April 2010 follow the link to the Energy Saving Trust’s webpage on FITs
A full table of eligible technologies and their FIT bands is available on the Department of Energy and Climate Change Website (DECC).
If you do not use all the electricity you produce you will also receive 3 pence for every kWh you export back to the grid (the export tariff). It may be possible for you to negotiate a better export tariff with your electricity supplier though they may only be interested in larger installations.
5. Example
A typical home uses 4500 kWh (units) of electricity annually. A 2kWp solar PV system would generate around 1700 kWh per year. Installed on an existing house the generation tariff would be 41.3pence per kWh.
You can calculate how much your particular system might earn you using the ‘Cash back Calculator’ on the Energy Saving Trust website found here.
6. Qualification
The Microgeneration Certification Scheme (MCS) is an important quality assurance mechanism that sets out both:
- Standards for installers of small-scale heat and power generators; and
- Standards for small-scale heat and power generating products.
To qualify for the FIT your renewable electricity generator must be installed by an MCS certified installer. The products must also be MCS certified.
Check the MCS website to see which installers and products are listed.
All products and installers must be
MCS certified for you to qualify for the FIT
Members of the REAL Assurance scheme must abide by the Consumer Code designed to ensure high standards of service. The REAL Assurance Scheme is part of the Office of Fair Trading (OFT) self-regulation Consumer Code Approval Scheme. MCS-certified installers must belong to an OFT backed Code.
Check the REAL Assurance Scheme website to see which installers are registered and what you should expect from a REAL member.
The REAL Assurance Scheme Consumer
Code is to protect consumers
7. Installing a system and claiming FITs
Before you sign a contract the installer should survey your site to ensure it is suitable for a particular technology.
For example:
- Shading from trees and buildings would have a substantial effect on the performance of PV solar panels.
- Trees, buildings, hills etc. can have an effect on wind speed and cause unwanted turbulence, affecting the performance of wind turbines.
Once your system has been installed, the MCS installer will provide you with a certificate of installation and register the installation with Ofgem on the central FIT register. You must then inform your chosen electricity supplier that you are eligible for the FIT and provide the MCS certificate to them. The electricity supplier will then cross-check the installation with the central FIT register. Payments will then be made by the energy supplier on a quarterly basis (unless otherwise agreed).
For a complete list of the Licensed Electricity Suppliers follow the link to the Ofgem webpage:
http://www.ofgem.gov.uk/Sustainability/Environment/fits/rfitls/Pages/rfitls.aspx
8. The Future
8.1 Inflation
The Tariffs are index-linked which means they will increase (or decrease) with inflation (RPI index). The tariffs will be adjusted annually from 2012 to ensure a positive return on investment (ROI )of 8-10%.
FITs will increase with inflation
8.2 Degression
Systems installed after April 2012 will still be eligible for FITs but the rate of the FIT tariff may be adjusted to reflect the costs of the technologies. As the technologies improve and the volume of installations increases the costs of installing should decrease.
Systems installed after 2012 could get lower tariffs
8.3 Expansion
Two or more different technologies can be installed at the same site and be paid separate tariffs. (e.g. PV solar panels and a wind turbine).
If two installations of the same technology are installed at the same site within 12 months of each other they will be regarded as one installation – the combined capacity of the installations will determine the FIT. E.g. 2.5kWp PV system installed in January 2011 and another 2.5kWp installed in October 2011. The combined installed capacity is 5kW therefore the FIT is 36.1 pence per unit for the generation tariff.
Two Installations Within 12 months
If there are two installations of the same technology at the same site, installed more than 12 months apart, the first installation keeps the existing band and the second installation enters the band for the combined capacity.
Two Installations 12 months Apart
9. Electricity suppliers
FITs are paid to you by Licensed Electricity Suppliers approved by Ofgem, they are not paid by the government. The licensed suppliers raise the money for the FIT by charging a small premium to all of their electricity customers. They are also permitted to charge for administration costs. It is predicted that by 2020 each electricity customer in the UK will have to pay roughly an extra £10 on their annual bills to cover this. Once a year the LESs will settle the amount they have paid between them to ensure consumers are all charged the same surcharge on their bill.
You do not have to register with your existing electricity supplier, but can choose another one, as long as you choose one of the Big Six (EDF, ScottishPower, British Gas, Scottish and Southern, E.on, Npower) but you do not have to switch. If you choose a smaller Electricity Supplier they may insist you switch your supply to them. For a full list of the Licensed Electricity Suppliers visit the Ofgem website:
http://www.ofgem.gov.uk/SUSTAINABILITY/ENVIRONMENT/FITS/RFITLS/Pages/rfitls.aspx
The scheme is not funded by tax-payers -
It is paid for by all electricity consumers
10. Grants
Previously there were grants available for renewable electricity and heat generators under the Clear Skies Scheme and then later the Low Carbon Buildings Programme. These have now finished. Generally, systems that were installed using these funds will not be eligible for FITs. If you have received a grant you may be able to return it so that your system becomes eligible for FITs instead. There are circumstances where some grants will not affect your eligibility to claim the FITs, particularly in Scotland. For more information on grants see the Energy Saving Trust website.
For England and Wales
http://www.energysavingtrust.org.uk/Generate-your-own-energy/Grants-offers-UK
For Scotland
http://www.energysavingtrust.org.uk/Generate-your-own-energy/Grants-offers-Scotland
For Northern Ireland
http://www.energysavingtrust.org.uk/Easy-ways-to-stop-wasting-energy/Energy-saving-grants-and-offers
