Feed In Tariff Scheme

The Feed-in Tariff Scheme or Clean Energy Cash back, as it’s also known, came into operation on 1st April 2010.

This is a new initiative set out by the Government, which is hoped, will encourage more people to start generating their own energy. This scheme works by enabling householders who generate their own electricity, from renewable or low carbon sources, to be paid for this energy by the suppliers.

How does the feed in tariffs scheme work?

The scheme works on the following principles:

1. Householder installs methods of generating renewable energy in their home i.e. solar panel or wind turbine etc
2. The electricity then generated by this source is then used within the home. Under the new scheme the householder is now paid by the supplier, for every unit generated. Any additional energy that is required by the householder can be purchased as normal via their supplier.
3. Any additional electricity that is generated that is not used within the home can be sold back to the National Grid.

How much will I get paid for electricity that I generate?

The basic tariff, for installations completed between 15th July 2009 and 31st March 2010, have been set at 41.3p/kWh for a typical domestic solar installation and 26.7p/kWh for a small wind turbine, however the tariff levels will vary depending on the scale of installations installed. The rates will be index linked to inflation over the lifetime of the scheme (up to 25 years) however the rates will decrease each year for any new installations that enter into the scheme.

Households can expect to receive an extra 3p per kWh that they export under this new scheme. An additional bonus is that the payments are not taxed.

The payments will be paid by your existing electricity supplier, with Ofgem policing the scheme.

The Government is hoping that the Feed in Scheme will be a big boost for the industry and also for homeowners who can expect to see a good financial return over the 25 years of the scheme.

The losers though under this new scheme could be those people who installed renewable installations prior to 15th July 2009, who will only be paid around 9p/kWh, however the Department of Energy and Climate Change point out that a lot of these people managed to obtain grants for these installations and the aim of the new scheme is to incentivise new installations.

With homeowners paying around £12,500 for solar panels, the payback is estimated at around 10 years, so homeowners need to ensure that they are prepared to stay in the property for at least that long to be able to benefit from the scheme, unless the value of the installations can be added to the value of the house. An interesting task for Estate Agents over the next few years to consider.

The conditions under the new scheme are clear in that the tariff or level of payment will depend on the type of property that it will be linked to. For example installed as part of a new build or an existing home.

What should I consider before installing renewables?

By far the most important factor has to be whether the system of generating the energy will generate enough revenue within a reasonable amount of time. E.g. solar panels should ideally be placed on south facing or near south facing large roofs and not in shaded or part shaded areas.

By generating your own electricity you should make sure that you do not then waste this energy within the home, so ensuring that your home is as energy efficient as possible is a must before investing in any renewable sources.

How you then use this energy is also a big factor that should be reviewed. For example if you install solar panels where the electricity is only generated during the day, then you need to make sure you use washing machines, tumble driers etc during the day so as to not waste this energy generated, hence cutting down the amount of electricity you need to purchase from your supplier.

What happens next?

Once you have completed the installation, using MCS (Micro generation certification scheme) certified products and installers you will need to contact your supplier and let them have your FIT eligibility certificate, which your chosen installer will have provided for you. The supplier will then check the FIT database and match up the certificate with the entry. Once this has been completed and confirmed by the supplier you will require an additional electricity meter that will measure the amount of electricity that your system is generating and also calculate how much is being fed back into the grid. Your payments will then be made by the supplier at intervals agreed between yourself and the supplier.

A list of registered Feed-In Tariff licensed suppliers may be found on the Ofgem website at the following link: www.ofgem.gov.uk

More comprehensive information regarding the Feed-In Tariff scheme along with a complete table of tariffs is available on the Ofgem website Ofgem Website.