Feed In Tariffs (FITS)

What is a Feed In Tariff?

On 1st April 2010 the Government introduced the Feed-in Tariffs (FITs) to encourage new investment in low carbon green technologies such as Solar PV, Wind Turbines, Hydro Generators and Anaerobic Digestion (AD) units.
Under the FITs, anyone who installs an eligible Solar PV system will receive a guaranteed fixed payment for all the electricity they generate, including what they use, for a period of 25 years. They will also receive an additional payment for any electricity they don’t use that they feed back into the National Grid. To top it all off, people installing systems will also benefit from reduced electricity bills as they’ll effectively become their own power stations and so won’t need to use as much from electricity suppliers and the grid.
This means that there has never been a better time for you to install a Solar PV system. Not only will you significantly reduce your carbon footprint, you’ll also reduce your energy bills whilst being paid to do it!

How are Feed In Tariffs paid?

Feed-in Tariffs are paid by electricity suppliers in one of two ways; either as a direct payment into your bank account or as a credit line to your energy bills. Although the FITs are a government initiative, the actual fund used to pay generators is paid into by electricity suppliers based on the proportion of the UK that they supply. Suppliers are recovering this cost through an increase in electricity bills to standard consumers, though this is estimated at only £3 extra per bill by 2016. This would be similar to the Climate Change Levy (CCL) currently added to UK energy bills.

How much will I be paid and what will I save?

The amount you are paid will depend on the size and type of system that you install as different technologies receive different amounts for different lengths of time. These payments are intended to give a certain percentage return each year based on the initial cost of a system.
Solar PV has been given the highest rate of payment and so for the majority of people it is the best option. The exact amounts available for the different sizes of PV systems are detailed below:

Size of PV SystemFeed-In Tariff (p/kWH)
4kWp (new Build) 37.8
4kWp (retrofit) 43.3
4-10kWp 37.8
10-100kWp 32.9
100kWp - 5MWp 30.7
Stand Alone 30.7

 

These feed-in tariff rates are paid for each unit of electricity generated, even if you use it in your own house/building. In addition to this if you have any excess electricity it can be exported back to the grid and you will get an extra 3p/kWh. This export can be measured by having an export meter installed by your electricity supplier.

Example 1

A 2.59kWp Solar PV system costing around £12,000 would produce roughly 2, 159kWh/year
If half of the electricity that the system produces was used in the building and the other half was exported onto the grid, you could reasonably expect the following:
Earn (2,159kWh X £0.433) + (2,159kWh/2 X £0.03) = £967.23
Plus Save (Save buying half the electricity generated 2, 159/2 kWh x £0.13/kWh) = £140.34
= £1,107.57/year
That’s an annual return of 9.23%

Example 2

A 3.96kWp Solar PV system costing around £14,800 would produce roughly 3,281kWh/year
Earn (3,281kWh X £0.433) + (3,281kWh/2 X £0.03) = £1,469.88
Save (Save buying half the electricity generated 3,281/2 kWh x £0.13/kWh) = £213.27
= £1,683.16/year
That’s an annual return of an astounding 11.37%

All tariff levels (including export tariffs) are indexed against the Retail Price Index (RPI). This ensures that the target rates of return are maintained for the lifetime of the FIT.
So as the cost of installing systems reduces, so will the FIT rates accordingly. When signing up for the FIT, the rate that you receive will remain constant for the tariff’s lifetime.