Green Deal for Solar Panels
Green Deal for Solar Panels
July 19, 2016
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Feed In Tariff

Feed In Tariff

The UK Feed in tariff for Solar PV

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The feed in tariff was introduced in the UK in April 2010 in order to encourage the switch to clean, renewable energy and is designed to pay regular income to the listed owner of the solar panel installation. The minimum payment for electricity generated by solar panels is guaranteed for 20 years by the FITs it also allows for an additional payment for exporting any unused electricity back to the national grid.

As a result of the FITs, a solar panel system for your home is an excellent investment as you will  not only have income, but also benefit from reduced electricity bills and a bonus for selling power back to the national grid. This payment is made to consumers by the Power suppliers and it is compulsory for the top 6 suppliers to pay the feed in tariff to consumers.

According to the Energy Savings Trust, a typical domestic 4.0 kWp solar panel system could produce: ( for illustration purposes only)

  • £157:00 a year from the Feed in Tariff for generating electricity
  • £89:00 a year from the Export Tariff
  • £62:00 a year reduction of current electricity bills (based on a current monthly bill of £55:00)
  • Providing a tax free* income £308:00 per year that will increase with inflation for the next 20 years.

Even without considering how much the price of electricity is likely to increase over the next 20 years solar panels are still a great investment, not forgetting the positive environmental impact the use of clean renewable energy will have. (source:energysavingtrust.org/solar-energy-check)

* For businesses different taxation may be applied

Feed in Tariffs & Potential Financial Benefits / Savings

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Generation tariff

You can receive a set amount of money from your utility provider for each unit or Kilowatt hour (kWh) of electricity that your solar panels generate. The amount of tariff is guaranteed for up to 20 years and the rate per unit is increased each year under an index-linking system so that it goes up in line with the cost of living.

Export tariff

You can also earn an additional income per unit for power that you “export” back into the National Grid. That means when your solar panels are making electricity and you do not use it, the surplus can be sold to your utility provider. In general, the amount you export is assumed to be 50% of what you generate and so a 4kw solar panel installation could be providing an additional 2kw of export tariff income.

Smart meters, once installed, will calculate the exact amount of export tariff due, but unless your system is over 30 kWp (kilowatt peak power) you don’t need an export meter to be fitted.

How the Feed-in Tariff is impacted by Energy Performance Certificates (EPC)

There is now a difference in the amount of FIT that homeowners receive, dependent on how energy efficient the property is, because as of 01/04/2012 the government introduced new rules on the feed in tariff payment scheme (FITs).

ENERGY PERFORMANCE CERTIFICATES

In order to receive the higher rate of feed in tariff, at the same time as you claim your payment you will need to send your utility provider an Energy performance Certificate which shows your property is energy efficiency rated band D or higher.

It is also worth noting that if you are only eligible for the lower rate when you apply for the FITs, even if you improve the energy efficiency of your property later, you will remain on the lower rate.

However, at present, this does not apply to systems fitted prior to 01/04/2012.

All homes should have an EPC if they have been bought, rented or built after 01/10/2008 – if you have rented a property, the landlord is responsible for providing your EPC; if you have bought a property the seller is responsible for providing the EPC (or the builder).

HOW DO I GET AN EPC?

If you don’t have an EPC a Domestic Energy Assessor (DEA) will need to visit your property and create a report for an EPC to be produced and this can cost from £50 to £100 (not including VAT).

Summary of solar PV tariffs

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*Information courtesy of  the Energy Saving Trust – solar calculator www.energysavingtrust.org.uk/solar-energy-calculator

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