Great News! The Feed-in Tariff is back in business.
The Feed-in Tariff was temporarily put on hold from the 15th January 2016 until 8th February 2016. This was to allow time for the new tariff rates and new regulations to be put in place, and now as our days start to get longer the Feed-In Tariff is back.
What is the Feed-in Tariff?
You are probably aware of solar panels – the kind that are usually installed on roofs and generate electricity using sunlight, also known as solar photovoltaic panels or “solar PV”. But did you know that if you have solar panels there are government incentives in place to pay you for all of the electricity your panels generate? This scheme is known as the “Feed-in Tariff”.
The Feed-in Tariff scheme launched in April 2010 and is one of the UK government’s key methods for reducing the nation’s carbon emissions and increasing the share of energy consumption that is produced by renewable resources.
How it works
The scheme works by paying those who generate their own electricity (either with solar panels or a wind turbine) for each unit (kilowatt hour) of electricity their system generates. The payments are made to you quarterly by your electricity supplier.
You are guaranteed your Feed-in Tariff payments for 20 years and the payments are free of tax (for domestic installations). Worth noting also is that the payments are linked to the retail price index (RPI) for the entire length of the tariff, meaning the amount you are paid will increase according to the percentage increase in the cost of living.
Feed-in Tariff payments are made up of two tariffs – the generation tariff and the export tariff, which are paid at different rates. Each tariff constitutes 50% of the total payment. The two rates, correct as of 8th February 2016, are:
- The Generation Tariff: The majority of solar panel installations for homeowners and businesses are smaller systems (with an optimum output of no more than 10kWp), which are eligible for the higher generation tariff of 4.39p per unit of electricity. This amount is termed the “generation tariff” as it is presumed you will use about 50% of the electricity you are generating in your home.
For a south-facing installation with an optimum output of 4kWp, you could expect to receive £156.72 annually based on the current generation tariff.
- The Export Tariff: The remaining 50% of your payment is paid at a rate of 4.85p. This tariff is termed the “export tariff” as it is presumed that 50% of the electricity you generate will be surplus for your needs and will be exported back to the national grid.
For a south-facing installation with an optimum output of 4kWp, you could expect to receive £86.57 annually based on the current export tariff.
Combining these two tariffs, with a south-facing 4kWp system you would expect an annual payment of £299.88 in addition to what you save on your electricity bills.
4.4% Return on Investment for 20 years - Better than an ISA!
The current best buy Fixed rate ISA will return you 2.6% and is guaranteed for 5 years*
The following table illustrates the return on investment for a south-facing 4kWp solar photovoltaic system fitted at a cost of £5,500. The return on investment is illustrated in the graph.
Anticipated Return on Investment over 20 years
Income from generation tariff:
(4.39p per kWh)
Income from export tariff:
(4.85p per kWh)
Annual Savings on Electricity Bills:
(10p per kWh, presumed 60% annual savings on electricity bills)
Total Annual Benefit:
Annual Return on Investment:
Including electric bill savings
For you to qualify for Feed-in Tariff payments, your installer and the products they use must be certified under the Microgeneration Certification Scheme. For you to qualify for the highest Feed-in Tariff rate, your property needs a rating of at least a D on its Energy Performance Certificate. If your property doesn’t already have a D rating or better, then energy efficiency measures such as loft insulation can usually get you to this grade. It is important to note that an EPC must be carried out before your solar panels are installed as the date on the EPC must be prior to the solar panel commissioning date on the completion certification (MCS certificate).
If you want to take advantage of the Feed-in Tariff, please contact us - you can speak to one of our Energy Team, who are trained to offer you the most up-to-date and accurate information.
*(source www.moneysavingexpert.com/savings/best-cash-isa#fixed as at 9th February 2016)