feed-in tariff
Feed-In Tariff Implementation
What is the Feed-in Tariff?
The Government launched the Feed-in Tariff on 1 April 2010, this is a premium payment for every unit of electricity that is generated by small solar pv systems.
The Government has is currently revising the Feed-in Tariff scheme and will introduce new tariffs on 3rd March 2012 and 1st April 2012.
The Feed-in Tariff is tax free to domestic households and index linked to inflation for both commercial and domestic installations.
Who is eligible?
All PV installations under 5MW, private and commercial are eligible. On the commercial side, the feed-in tariff will encourage photovoltaic (PV) installations among farmers, rural businesses, small and medium enterprises.
What was the old tariff (there is a chance this could be reinstated until 3 March 2012, subject to appeal)? 8.5p for systems 250 - 5MW How much will I get from 12/12/11? 8.5p for systems 250 - 5MW (and standalone)
43.3p per unit for systems up to 4kWh (37.8p for new build)
37.8p for systems 4 - 10kWh
32.9p for systems 10kWh - 50kWh
19p for systems 50kWh - 150kWh
15p for systems 150-250kWh
Additional 3.1p bonus will be awarded for every unit of electricity exported.
The Government has confirmed the 21p will remain in place until 1 April 2012.
21p per unit for systems up to 4kWh (retrofit and new build)
16.8p for systems 4 - 10kWh
15.2p for systems 10kWh - 50kWh
12.9p for systems 50kWh - 250kWh
Additional 3.1p bonus will be awarded for every unit of electricity exported.
How long will it last?
The Government has committed to pay the tariff for 25 years for photovoltaic installations.
Will the tariff change?
Once your tariff is agreed with the Government it will not decrease. It will increase each year in line with inflation (retail price index). The FiT will be subject to reviews by the Government for new installations.
Why is the Government doing this?
The Government is way behind other European countries on commitments to reduce carbon emissions and to secure against future oil supplies. This is one way it can catch up. The UK currently produces 5.5% of electricity from renewables, this is expected to rise to 30% to meet the 15% 2020 target for all energy.
Feed-in tariffs have been introduced successfully in many countries around the world, including Spain and Germany. It has encouraged huge growth in PV and created many jobs.
How will it be implemented?
Ofgem will administer the feed-in tariff. Suppliers will be responsible for paying the reward to their customers.
Is VAT payable?
VAT at 5% is payable on domestic installations. New Builds are often VAT exempt, commercial buildings will pay standard VAT rates at 20%.
Give me an example (installed after 3rd March 2012) Cost of 2.5kWp system incl 5% VAT and scaffolding - £6476 Electricity savings from system output (assuming 50% used in house) Total saving plus income/annum - £633
This is a feed-in tariff example for a 2.5kWp installation of 10 x 250W Suntech panels:
if used in house - £170
Feed-in tariff on all generated electricity est 2146kWh @21p - £450
Electricity exported back to the National Grid @3.1p - £33
Return on Investment - 10%
For more information www.gemserv.com or www.ofgem.gov.uk
How much will I get from 1st April 2012?
These tariffs are under review until 23/12/11, but the Government has confirmed the 21p will remain until 1 April 2012. The Government is proposing energy performance proposals will be linked to the tariffs. We are currently awaiting full announcement.
