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 solar pv systems under 5MW. 

The Government continuously revises the tariff depending on uptake. The current tariffs are valid from 1 April - 1 July 2012.

The Feed-in Tariff is tax free to domestic households (not commercial) 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 is an EPC Rating?
DECC has put in place a minimum energy efficiency requirement for anyone wanting to install solar panels on their building and claim the full FIT rate.  From 1 April properties will be required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for the full FIT rates. Exclusions inlude buildings not required to hold an EPC ie agricultural buildings without walls.

How much will I get from 12/12/11?
The Government has confirmed the 21p from 1 April - July 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

 8.9p for systems 250 - 5MW  (and standalone)

Additional 3.1p bonus will be awarded for every unit of electricity exported.

What happens if I install on more than one property?
New ‘multi installation’ tariff rates for PV set at 80% of the standard tariffs will also be introduced from 1 April for solar PV installations where a single or individual organisation is already receiving FITs for 25 or more other solar PV installations.  This is designed to reflect the lower costs these installations experience through economies of scale.  Based on responses received to the consultation, individuals or organisations with 25 or fewer installations will still be eligible for individual rate.

How long will it last?
The Government has committed to pay the tariff for 25 years for photovoltaic installations. this is currently under review and might drop to 20 years for future 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 1st April 2012)
This is a feed-in tariff example for a 2.5kWp installation of 10 x 250W Suntech panels:

 Cost of 2.5kWp system incl 5% VAT and scaffolding - £6476

 Electricity savings from system output (assuming 50% used in house)
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 

Total saving plus income/annum - £633
Return on Investment - 10%