The Feed-in Tariff: "Clean Energy Cashback"
The solar feed-in tariff or FIT was introduced in April 2010 as an incentive to small-scale commercial, public and domestic investors to produce renewable energy. It is important to distinguish the difference in tariffs between wind and solar, since whilst tarifs exist for both, solar will receive higher subsidies than wind.
Find the feed-in tariff calculator from the Energy Savings Trust here.
What is the FIT?
The FIT was introduced to encourage small-scale renewable electricity generation in plants of up to 5 MegaWatts (mW). Installations above 5 MW fall within the different system of Renewals Obligation Certificates (ROCs). Installations between 50 KiloWatts (kW)and 5 mW can opt either for the FIT or ROCs and any installation below 50 kW are only eligible for FITs.
How it works
To qualify for the tariff you must have your installation certified under the Microgeneration Certification Scheme (MCS). (Our instalers are MCS qualified). If you are eligible for the FIT, then you can benefit in 3 ways:
- Generation tariff. You receive a set rate paid by the energy supplier for each Kilowatt Hour of electricity you generate and use in your own property. This rate is guaranteed for 25 years in the case of solar (PV).
- Export tariff. You will receive a further 3 pence per Kilowatt hour you export back to the grid.
- Any electricity you do purchase from your supplier will be at normal rates, but this amount will be dramatically reduced depending on the power you are able to generate for yourself.
The Energy Savings Trust demonstrates that a typical domestic house with a 2KWh installation would earn approximately:
- £700 per annum from the Generation tariff;
- £25 per annum from the export tariff;
- £110 per annum reduced electricity bill cost.
This makes a saving of £830 per year.
What are the current rates? (as at March 2011)
Current FIT rates adjusted for inflation are as follows:
| Scale | Previous feed-in tariff (pence/kWh) | Updated feed-in tariff (pence/kWh) |
≤4 kW new |
36.1 |
37.8 |
≤4 kW retrofit |
41.3 |
43.3 |
>4-10kW |
36.1 |
37.8 |
>10 - 100kW |
31.4 |
32.9 |
>100kW - 5MW |
29.3 |
30.7 |
Standalone |
29.3 |
30.7 |
How long does the tariff last?
The tariff will be paid for 25 years and is adjusted annually for inflation. New installations from 2013 onwards will be subject to decreased tariff rates reflecting both the likely reduction panel and inverter costs as well as to "cool" the incentive effect of the FIT itself on market demand. The scheme will also be reviewed periodically, the first review being scheduled for 2013.
What does this mean for the UK solar market?
The introduction of the FIT in April 2010 saw projected installations for 2010 up to 96MW (up from only 6MW in 2009!) making the UK market allegedly the fastest growing in the world. Whilst the rate of growth is expected to settle in 2011 (143MW) and 214MW in 2012 and 500MW by 2014 the rates will be nowhere near that initial 1500% jump in 2010. See the diagram below.
At the moment solar product prices in the UK are high relative to Germany and the US. However, the cut in FiTs in Germany may make demand fall there and not only release panel / inverter backlog, but also make the UK relatively more attractive to foreign suppliers to become more competitive with their pricing. It is possible the expected demand will lead to a premature reduction in the FIT in later years.
The other implication on the UK market is how the market will supply enough MCS accredited installers (which you have to have to qualify for the FIT) to meet the expected demand. This is something Green Energy (eu) is looking into seriously - offering MCS training to our own network of installers. By becoming a Green Energy (eu) accredited installer, you can then participate in installation projects near you.
Possible problems
- Is the technology stable-enough to realise the return on investment before the technology itself needs replacing? Certainly with Crystalline Silicon panels warranties of up to 25 years are not unusual as the technology is stable. The newer Thin film solar cell (TFSC) has less of a track record so it is important to ensure the adequate warranties exist on installations to offset the risk.
- If the limit of a FIT-qualifying site is 5MW, what defines a "site"? For example do multiple installations within the same geographical area (e.g. rooftops belonging to the same landlord) potentially risk failure to qualify for the FIT? If this is a consideration then you have to seek advice from your installer and legal representative before embarking on installation.
- Planning hostility and connection issues - typically seen with wind-farm installations, it remains to be seen whether these issues (planning hostility and connection delays) will obtain for Solar PV installations.
What can you do next?
If you have an existing installation that you believe could be migrated away from the ROC to the FIT (because it is less than 5 mW) or you are looking to create an installation to take advantage of the FIT, then please contact Green Energy (eu). We provide an end-to-end solution including planning, supply of panels and inverters, we provide our own MCS accredited installers and will also set up and operate the tariff.
