Feed in Tariffs

Feed in Tariffs Made Simple

The new government clean energy cash back scheme or "feed in tariffs" as they are also known was an incentive launched by the government on the 1st of April 2010 to encourage the uptake of renewable technologies such as solar photovoltaic (PV) and wind turbines.

The tariffs are paid to system owners through there utility energy supplier, The following table illustrates the  tariff rates based on what type and size of system is installed. There are different tariff rates for new build and these are slightly lower than existing properties.

The Process

Once you have a (PV) system installed by an MCS accredited installer your system is registered with the micro certification scheme database, a certificate with a unique serial number is then produced by your installer which you must hand over to your utility company. You are then eligible to enter the scheme and the 25 year tariff.

How Much Income Do I Get From The Tariff?

This figure obviously depends on the size of the system you have installed, but to gain the maximum payment from the tariff 41.3 per unit your system must be under 4 kW in output, This is because the government favours supporting small scale installations such as homeowners above commercial applications, that said the tariff is also very rewarding for larger scale installations and this is why farmers and commercial land owners are investing in photovoltaic systems.

EXAMPLE OF A TYPICAL 4 KW SYSTEM AND THE TARIFF INCOME THIS SYSTEM WILL GENERATE ANNUALLY

This calculation is an accurate assessment on how a 4 kW system will perform and is based using SAP 2005 figures, 850 K wh per kW installed with 75% personal usage of the electricity produced. Some companies may use higher figures that are misleading. Remember as energy prices increase so do your savings!

How Are These Figures Reached

SIMPLE,  A 4kW system will produce 3,400 kWh"s  per year. so for each KWh your system earns 41.3p so 41.3p x 3,400 = £1,404.20.

The next figure we use is INCOME SAVINGS this figure is based on that because your system is producing 3,400 kwh per year you will not have to buy these units from your electricity supplier, the only difference is obviously you will not be around the house or property all the time using the electricity you generate so you will need to sell the excess electricity back to the national grid, We therefore base income savings on 75% of electricity usage
so three quarters of your generated electricity is used and 25% is sold back to the grid, usually you buy electricity at a standard rate of 15p per unit Kwh based on this 2550kwh x 15p =  £382.50 INCOME SAVINGS.

Lastly you will receive a payment called EXPORT INCOME. This is the payment you also receive off your electricity supplier for selling them your excess electricity, power you can not use for example when you are out during the day or on holiday. The utility companies buy your energy at 3p per unit Kwh and re sell it to there customers as highlighted earlier the percentage of export is generally 25% so it would mean a quarter of your 3,400 Kwh units produced annually by your system will be sold back to the grid.

850 Kwh x 3p =  £25.50 annual export income,
Once these three figures are added together this gives your annual income from a photovoltaic system, Impressive stuff i am sure you will agree? And remember its guaranteed for 25 years!

Still Not Convinced? Other Benefits

The modules (panels) are guaranteed for 25 years by the manufacturer but the life expectancy given is much higher more like 35 to 40 years! So there is no danger of the system not lasting the length of the government tariff.

As soon as you have installed a PV system you have dramatically increased the value of your home as the tariff is attached to the property, Also you have a property that is much more efficient than your neighbours for example with lower running costs and as a result is a more attractive proposition for a potential purchaser.

For example, should you decide to sell your property say after 5 years into your tariff, you will still have 20 years income remaining, imagine this as a negotiation tool when you market the home. Not only do you have a property with lower running costs but you would have a home that produces an income for the potential purchaser, of course this means you would be able to negotiate a much higher purchase price for the property, in essence you are selling a property that comes with its own cash machine on the roof!

PV INSTALLED is a common sense decision and whichever you look at it there is no denying that as a product its a great investment.

Why not take a more detailed look at how the scheme runs and the feed in tariff tables.

If you have any questions feel free to contact Salop Energy today.