Under the government’s feed-in tariff (FIT) scheme, you will be paid for every unit (kWh) of electricity you generate, regardless of whether you use it or not!
The FIT scheme was introduced in 2010 and since its launch it has encourages thousands of UK homeowners to have solar PV installed on their home. The savings you can make from using your own power, plus the FIT, makes solar PV one of the best investments around.
How it works
The feed-in tariff is guaranteed by the government for 20 years, index linked so it rises in-line with inflation and payments are tax free if you live in the property.
There are three financial benefits to having a solar PV system installed
- Generation or Feed-In Tariff (FIT) Tariff
- First you will be paid for all the renewable electricity your system produces. This is called FIT or generation tariff and it means your energy supplier will pay you for the electricity your system generates, whether you use it or not. The current FIT rate for a typical 4kw domestic system is 14.9p for every unit (kWh) you generate. This amounts to an annual payment of £477, which you will receive by cheque from your energy supplier. There are also great FIT rates for commercial properties so as well as seeing a reduction in bills solar PV can also be an investment.
- Saving on electricity bills
- Second, as expected you will see a reduction in your electricity bills. The electricity generated by your solar panels will feed into your inverter, which converts the suns energy to usable AC electricity. Then from your inverter it will supply your appliances where prior to solar PV you would have been drawing straight from the grid and been paying around 12p per Watt. When using your own renewable electricity it is totally free meaning a 4 kW system (3200 kWh per annum) would amount to an annual saving of £384. Energy bills are continuous rising so this figure will grow year on year.
- Export tariff
- Obviously there will be times when your solar systems production outweighs your energy demands. When this is the case the surplus energy will be exported back to the national grid and you will be paid an additional 4.5p for it, so none of your systems output is wasted.
Generation Tariff + Export Tariff + Bill Savings = Total Annual Benefit
To claim the tariff system must meet the following criteria:
- Your installer must be Microgeneration Certification Scheme (MCS) accredited.
- Your energy supplier must offer FIT payments (see list of energy suppliers – https://www.ofgem.gov.uk/environmental-programmes/feed-tariff-fit-scheme/applying-feed-tariff/registered-fit-licensed-suppliers)
- Your solar panels must also be MCS approved.
- You must meet the necessary energy performance certificate (EPC) requirements of grade D or above (solar PV will improve your rating)
Every quarter the FIT will be reviewed and dropped in line with the total number of installs. So ultimately the more properties that have solar PV installed the lower the Feed-In Tariff rate becomes. The average drop rate is 3.5% every quarter, however this can change as it will always depend on the net installs for that quarter.