Feed In Tariff

The feed in tariff or FITs is a scheme to encourage the take up of green energy by the UK public. It essentially means that you get free solar panels from the government or to be more precise the current electricity providers as they are the ones really subsidising the scheme.

Prior to the existence of this tariff it wasn't really cost effective for the general public to install alternative energy systems such as solar due to the long payback period. FITs has meant that getting green energy systems installed such as wind, hydro, Micro combined heat and power and particularly solar has not only become a more viable option but at the current rates people who install a system will end up making a tidy profit.

The tariffs are very generous, so much so that many companies providing solar and wind power installation services have been swamped by the demand. The following tariffs below should the rate you will get paid for the energy generated from the different free energy systems.

• 41.3p/KWh on a solar system of up to 4KW installed on an old house
• 36.1p/KWh on a solar system of up to 4KW installed on a new build house
• 34.5p/KWh on a wind turbine of up to 1.5KW
• 26.7p/KWh on a wind turbine over 1.5KW up to 15KW
• 19.9p/KWh on hydro systems of up to 15KW
• 10p/KWh on a Micro CHP system of up to 2KW

Systems such as Micro CHP are not strictly renewable so the tariff is a lot lower, they do however have the advantage over the other systems as being able to generate on demand. There is also interestingly a hydro option but I can't see there being much of a take up for this unless you own your own powerful river. Also interesting to note that solar hot water systems seem to have been ignored in this scheme which is a shame as like Micro CHP can help to cut carbon emissions.

It is the tariff for solar energy, more specifically solar photovoltaics that is causing the most excitement as so many people can take advantage of it and with the free solar panels being offered by several companies this makes it a hard to resist offer. With the free system however you will only benefit from the free electricity and not the feed in tariff payments. Instead the payments go to the installer, hence the reason they are currently so willing to provide and install a solar system for free.

Anyone can claims these payments if they install a system but you have to buy a Microgeneration Certification Scheme (MCS) solar PV unit and have it installed by an MCS approved installer in order to qualify for the payments. You will get a certificate that you can send to your electricity supplier who will then pay you directly for any electricity you generate.

Feed-in Tariff rate changes for April 2011

The rates for the feed in tariff have been changed and are effective from the beginning of April 2011. As this site concentrates on solar photovoltaic renewable energy the rates below reflect only solar PV and not any other renewable technologies that also generate electricity.

The increase in the rates are to reflect the governments promised yearly increase in line with inflation. For most people who have installed solar the rate paid for retrofit systems, that is systems installed on existing homes and that are of a capacity less than 4kW there has been an increase from 41.3 pence per kilowatt hour to 43.3 pence.

For solar fitted to new homes, which is defined as solar fitted to houses prior to anyone moving in and is less than 4kW the rates have increased from 36.1 pence per kilowatt hour to 37.8 pence.

Solar PV greater than 4kW but less than 10kW has risen from 36.1 pence per kilowatt hour to 37.8 pence. Systems with an installed capacity greater than 10kW but not greater than 100kW the rate has changed from 31.4 pence per kilowatt hour to 32.9 pence per kilowatt hour. For systems greater than 100kW has seen a rise from 29.3 pence per kilowatt hour to 30.7 pence.

Finally for stand alone systems not connected to provide electricity to a building the rate has changed from 29.3 pence per kilowatt hour to 30.7 pence.

Result of the DECC spending review

Added 8th October 2011

As a result of the DECC review on the feed-in tariff rates there have been some changes to the rates paid for solar photovoltaic systems. The main changes were the cuts in the levels of payment made for the comparatively larger systems. For the rates that will affect most homeowners the rates have remained on track with what was expected.

The FIT scheme was designed to encourage homeowners to install solar. To this end the rates offered to people who installed solar early were high and the plan was to taper of the payments for homeowners who entered the game later on. So depending on which tax year you install your system will depend on which rate you lock in. Whatever you lock in that rate you will still get an annual index linked yearly increase in your rate.

So if you joined the FIT scheme in year 1 (2010-2011) you would have started off with a rate of 41.3 pence which then increased to 43.3 pence in year 2 (2011-2012). This will continue to increase yearly.

If you joined the scheme in year 2 (2011-2012) your starting FIT rate would be 43.3 pence. This is the same rate that year 1 joiners are currently getting. This will also increase yearly as it is index linked.

Homeowners who invest in solar from year 3 onwards will get a lower rate, the longer you wait to install solar the lower the rate that you can lock in will be. So for year 3 (2012-2013) the starting rate is 39.6 pence, nearly 4 pence less per kilowatt of electricity that your panels produce.

The starting rates continue to decrease for each year that you put off installing solar. The rates are as follows for homeowners who invest in solar, the years listed shows your starting FIT rate which increases every year. The earlier you invest in solar the higher the starting rate.

Year you install solar - starting FIT rate

• 2011 to 12 - 43.3p
• 2012 to 13 - 39.6p
• 2013 to 14 - 36.3p
• 2014 to 15 - 33.2p
• 2015 to 16 - 30.2p
• 2016 to 17 - 27.5p
• 2017 to 18 - 25.0p
• 2018 to 19 - 22.7p
• 2019 to 20 - 20.7p
• 2020 to 21 - 18.8p

So depending on which year you buy and install your solar system will dictate the rate that you will earn for the electricity that your system produces. Getting in as early as possible means that you can benefit from a higher on going rate.