Feed In Tariff (FiT)

For Solar Panels

 

What is the Feed in Tariff?

One of the attractions of taking on major renewable energy projects is the government’s Feed in Tariff or FiT.  This essentially means that the electricity produced by you is bought by an energy company and is used to contribute to the grid. It puts installations like solar panels into the category of a long term investment that can, under certain conditions, yield a decent profit as well as providing a means of producing clean and cheaper electricity.

The Feed in Tariff was introduced to encourage people to take up renewable energy generating technologies such as:

  • Solar panels
  • Wind turbines
  • Hydroelectric generators
  • Anaerobic digesters
  • Micro CHP (combined heat and power) technologies

Large companies such as British Gas and Scottish Power are, by law, compelled to provide Feed in Tariffs for any household or business that produces excess electricity by means of such technologies as solar power. However, smaller companies are not forced to administer the scheme and it is worth asking the question if you get your energy from anywhere outside of the big six.

How to Qualify for a Feed in Tariff

If you are having solar panels or a wind turbine installed, both the equipment and the installer need to be certified under the Microgeneration Certification Scheme (MCS). If this is the case then you will be eligible for FiT based on your home’s Energy Performance Certificate (EPC). You CANNOT qualify for the Feed in Tariff if you have done a DIY installation.

Note that hydroelectric and anaerobic technologies have a different qualification standard and you will need to go through what is known as the ROO-FiT process.

You can find certified installers of renewable technology on our hub database.

How Does the FiT work?

Basically, if you have a solar panel installation, you will be creating your own electricity. This is bought by the energy company who will pay you for each unit that you generate. They will also pay you an export tariff for any surplus electricity you create. The Feed in Tariff is the total amount that the energy company pays you and will vary depending on the size and efficiency of your installation.

FIT Rates 01 Jan 16 - 31 Mar 16

Here is the Government planned digression of FIT payments over the next 3 years*

Quarter:

Generation Tariff for
<10kW (p/kWh):
Q1 2016
4.39
Q2 2016
4.32
Q3 2016
4.25
Q4 2016
4.18
Q1 2017
4.11
Q2 2017
4.04
Q3 2017
3.97
Q4 2017
3.90
Q1 2018
3.83
Q2 2018
3.76
Q3 2018
3.69
Q4 2018
3.62
Q1 2019
3.55

* prices subject to uptake volume and adjustment

A full list of current Feed in Tariffs for different technologies can be found on the Ofgem website.

How Long Will the Feed in Tariff Last?

The good news is that Feed in Tariffs for solar PV panels, wind turbines, mCHP and hydro are guaranted for 20 years. This means that, if you can afford the upfront costs, going for one of the eligible renewable technologies can present a significant investment over time, whilst also ensuring that you are reducing your energy bills and contributing to a cleaner environment.

The amount you earn from the FiT will depend on the efficiency of your system and its size but a normal 2 to 3 bedroom house with a 4 kW array and average family usage could expect to earn/save around £266 a year (At the current cost of electricity, which will most likey rise consideraby over the lifetime of the system). Off-setting this against the initial cost means that many projects could mean that your installation could be breaking even and possibly making a profit in as little as ten to fifteen years.

FiT Current Statistics

Since it was introduced in 2010, 470,892 installations have registered for the Feed in Tariff (as of March 2014). 2,385.59 MW of installed capacity has been registered and nearly £134 million paid out to generators. By far the most popular technology benefiting from the FiT is solar PV, mainly because it is the renewable energy source of choice for most households.

If you want to find out more, Ofgem produce a quarterly report on who is taking up Feed in Tariffs which you can see here.  

Will I Benefit from a Feed in Tariff?

This is going to depend on the size and production of your array. With solar PV panels, the smaller your installation size the less you are going to produce. It’s not just the panels themselves that make the difference. If you have an energy inefficient house it will affect your Energy Performance Certificate. To qualify for the D rating which is the minimum for having the high rate tariff, you may need to spend more money on insulating your home and making sure it is energy efficient.

With this in mind, before you select any renewable technology and opt into the FiT, we advise that you deal with the problems of loft and wall insulation first, as well as the energy efficiency of your various appliances.

Other FiT Issues to Consider

  • As installation prices drop and energy prices rise, your pay-back-period will change for the better as long as digression doesn't offset the changes at the time of purchase.   
  • Keep an eye on digression, FiT rates are dropping fast.  
  • Before you sign up for a FiT with a particular energy company read the contract carefully and query anything you don’t understand.
  • You will need to remember to submit meter readings at the right time – no meter reading means you don’t get paid or paid on time.
  • You can switch your energy supplier and your FiT licensee – make sure that if you are moving to a smaller company that they actually offer that service.
  • The FiT for domestic homes is tax free. For businesses you are liable for tax.

There’s no doubt that the Feed in Tariff is an attractive proposition for many people who are looking to find a cleaner energy supply and a possible investment for the future. If you think you would like to produce your own electricity then you need to take the right advice. With that in mind you can call us on 01392 693900 or search our database of certified installers who can plan your solar or other renewable installation and advise on the best choices to make.

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