The Feed-in-Tariff (FiT) scheme for solar PV gives a significant advantage to the long-term running costs of a property, building or business. It provides a sound investment whilst adding real value created through the revenue generation stream.
By becoming a ‘microgenerator’ – creating renewable energy on a small scale – you are able to benefit in a number of ways.
There are three separate financial benefits:
In April 2010 the Government introduced a piece of legislation stating that every electricity provider is obliged to pay anyone generating electricity from an accredited renewable source, for all the electricity they produce, irrespective of use.
The rate paid for the electricity is set by the Government and varies depending on the potential output of the system. It is linked to the Retail Price Index (RPI) in order to rise with inflation annual, and payments are made for a 20 year period.
In addition to receiving payment for all of the electricity you generate, you can also sell unused electricity to your electricity provider. This is known as the ‘Export Tariff’ and is paid at a standard rate for all systems no matter their size. This rate is linked to the Energy Price Index (RPI) and therefore is also adjusted annually in line with inflation.
For systems smaller than 30kWp this payment is based on the assumption that 50% of the generated electricity is used onsite and the other 50% is exported into the national grid. For the 50% assumed to be exported, your electricity provider will pay 4.64p per kWh. In reality you may use more or less than half of the electricity generated, however you will always receive payment based on 50% of the total electricity generated.
If the system is greater than 30kWp your electricity provider will install an export meter. This will meter exactly how much electricity is exported to the national grid, and all payments are made on readings from this meter.
The other main benefits of the FiT are:
From 8thFebruary 2016 Rates |
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Description |
Standard Generation Tariff (p/kWh) |
Multi-installation Tariff – more than 25 (p/kWh) |
Lower Tariff – energy efficiency not met (p/kWh) |
4kW or less, new build and retrofit |
4.39 |
- |
- |
Greater than 4kW but not exceeding 10kW |
4.39 |
- |
- |
Greater than 10kW but not exceeding 50kW |
4.59 |
- |
- |
Greater than 50kW but not exceeding 150kW |
2.70 |
- |
- |
Greater than 150kW but not exceeding 250kW |
2.70 |
- |
- |
Greater than 250kW but not exceeding 5MW |
2.27 |
- |
- |
Stand-alone solar photovoltaic (not attached to a building and not wired to provide electricity to an occupied building) |
0.87 |
- |
- |
EXPORT TARIFF |
4.40 |
4.40 |
4.40 |
A 176kWp solar PV array mounted on a south facing commercial roof will cost in the order of £217,000 plus 20% VAT. Taking into account the ‘Generation Tariff’ earned from payment on every unit of electricity generated by the system, revenue from the ‘Export Tariff’ paid on every unit of electricity exported to the national grid and most importantly the huge reduction of imported energy due to on-site usage of the generated electricity, it can be shown that returns of 16.2% can be achieved:
System Size and Cost | |
Installed System Size(kWp) |
176 |
Installed System Cost (excl. VAT) |
£217,000.00 |
VAT @ 20%: |
£43,400.00 |
Total Cost of System (incl. VAT) |
£260,400.00 |
System Output | |
Estimated System Generation per annum (kWh) |
179,520 |
Feed-In-Tariff (FiT) Income | |
Year 1 FiT Generation Revenue (10.62p / kWp) |
£19,065.02 |
Year 1 FiT Export Revenue (20% @ 4.64p / kWh) |
£1,665.95 |
Total Year 1 FiT Revenue |
£20,730.97 |
Total FiT revenue over system life (20 years) |
£585,665.58 |
Energy savings | |
Year 1 value of avoided electricity cost (80% @ 10p/kWh) |
£14,361.60 |
Total value of avoided electricity cost (over 20 years) |
£648,298.47 |
Total Benefits | |
Total Year 1 Benefits |
£35,092.57 |
Total Benefits over 20 Year Term |
£1,233,964.05 |
Payback Calculations | |
Break-even Point (years) |
6.2 |
Annual Return on investment |
16.2% |
Assumptions;
Visit the dedicated Feed-in-Tariff website for further details. www.fitariffs.co.uk