Feed In Tariff
Feed-In Tariffs were introduced in April 2010, after The Carbon Trust grant ended funding for installation of renewable energy schemes in February that year.
The tariffs were designed to encourage take up of more environmentally-friendly ways to produce energy, and typically provided earnings and savings of around £1,100 a year when they were first introduced.
Several other energy-generating schemes also qualify for Feed-In Tariffs qualify for the scheme, including wind turbines, hydroelectricity, anaerobic digesters and micro combined heat and power.
Due to overwhelming demand Feed-In Tariffs have been cut several times in the past couple of years, however on the plus side this has led to installation prices halving. Considering the energy produced has remained the same this still makes it an attractive option in terms of the returns generated and it is now much more accessible to ordinary families.
Here, we explain how they work, and how much you might expect to receive if you are considering solar panels.
How much is the Feed-In Tariff worth?
The returns from the Feed-in Tariff scheme are split into three parts, the Generation Tariff, the Export Tariff, and a reduction in your electricity bills.
The Generation Tariff currently delivers 15.44p per kilowatt hour (kWh) of energy produced by systems smaller than four kilowatts.
Systems up to 50 kilowatts will receive 13.3p per kilowatt hour while those systems between four and 10 kilowatts will receive 13.99p per kilowatt hour. The Export Tariff delivers an extra 4.5p per kWh for energy exported to the national grid. At some stage smart meters will be installed to measure exactly what you export, but until then it is estimated as being 50% of the electricity you generate.
If your property has an Energy Performance Certificate with band E or lower, then you will receive a lower Generation tariff of 7.1p per kilowatt hour.
Properties with solar panels which were installed between August 1 and October 31, 2012, receive a marginally higher rate of 16p per kilowatt hour for systems smaller than four kilowatts, 14.5p per kilowatt hour for systems between four and 10 kilowatts and 13.5p per kilowatt hour for systems between 10 and 50 kilowatts.
Those with solar panels installed before August 1, 2012, receive even higher feed-in tariffs, while those with panels fitted before December 12, 2011, get the highest tariffs of all, of 43.3p per kilowatt hour (kWh) of energy produced, index-linked for 25 years. The Export Tariff delivers them an extra 3.1p per kWh for energy exported to the national grid.
The tariff period is now 20 years for anyone having panels installed - it is 25 years for anyone who had panels installed before August 1, 2012.
As well as the Feed-In Tariffs, fitting solar panels on your house will also result in savings on your electricity bills, because generating your own electricity means you don't have to buy as much electricity from your energy provider. The amount you save will vary depending on how much of the electricity generated is used in your home.
According to the Energy Saving Trust, if your system is eligible for the Feed-In Tariff, it could potentially generate savings and income of around £635 a year. This is based on a 3.5kWp solar PV system eligible for a Generation Tariff of 15.44p/kWh.
You will obviously need to weigh the income generated by the tariff with the initial cost of installation of your solar panels.
*51% consumers, MoneySuperMarket data, December 2014