Copyright 2011© GEM Solutions UK Ltd
Feed-in Tariffs (FITs) became available in Great Britain on 1st April 2010.
Under this scheme energy suppliers have to make regular payments to householders and communities who generate their own electricity from renewable or low carbon sources such as solar electricity panels (PV).
The FITs scheme guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to the bill savings made by using the electricity generated on-site.
Feed-in-Tariffs benefit you in 3 ways:
1. Generation tariff – 43.3p/kWh* is paid by your energy supplier for each unit of electricity you generate. This rate may increase each year based on the retail price index (inflation) and all payments are tax free on domestic installations. You will then recieve regular payments guaranteed for 25 years.
2. Export tariff - you will receive a further 3p/kWh from your energy supplier for each unit you export back to the electricity grid, when it isn’t used on site.
3. Energy bill savings – you will be making savings on your electricity bills, because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you generate and use on site.
*Rate from April 2011
Making a return on your investment over 25 years
As an example, based on a domestic solar electricity system costing £11,500, with an installation size of 2.2 kWp you could earn around:
- £770 per year from the Generation Tariff
- £30 per year from the Export Tariff**
- £120 per year reduction in current electricity bills.
This gives a total saving of around £920 per year.
Over 25 years based on £920 per year, you would generate £23,000 worth of savings, giving £11,500 clear, tax free profit whilst returning over 7% return on your investment.
The savings calculated will increase signifiicantly should energy costs rise over the coming years and don't take into account the annual RPI increase on the generation tariff rate.
**This assumes 50% of the electricity generated is exported. The figure will vary depending on how much is exported.