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Feed In Tariff
The Feed-in-Tariff scheme was originally introduced by the government to promote widespread uptake of a range of small-scale renewable and low-carbon electricity generation technologies.
It doesn't only apply to solar panels - wind, hydro, and anaerobic digestion technologies can also qualify. These will however, involve a much greater outlay in terms of cost and will require planning permission.
With solar panels, the returns from the Feed-in Tariff scheme are split into three parts, the Generation Tariff, the Export Tariff and a reduction in current electricity bills.
How much will I earn from the feed-in tariff?
The Generation Tariff currently delivers 43.3p per kilowatt hour (kWh) of energy produced and is index-linked for 25 years. The Export Tariff delivers an extra 3.1p per kWh for energy exported to the national grid.
In addition to this, as already mentioned, you can usually save at least £90 off your energy bills each year by using the solar electricity you have generated.
However, take up of the Feed-In Tariff scheme quickly surpassed expectations, which is why the original pot of money allocated to the scheme is already running out and the government has opted to slash the subsidy.
Changes to the feed-in tariff scheme
On October 31, 2011, it was announced that the government would cut Feed-In payments to just under half from April 1 for panels installed and registered from December 12. That means the Generation Tariff will fall from 43.3p per kWh to just 21p per kWh. The Export Tariff will remain unchanged.
Most people were expecting the cuts only to affect people who fitted panels after 31 March 2012, which has meant a rush of people trying to get panels installed before the tariffs are reduced.
The changes to the Feed-In Tariff mean that the length of time it will take for panels to pay for themselves will nearly double, from an estimated 10 years to around 18.
The good news is that these changes won't affect homeowners who already have solar panels installed, so they can continue to receive the feed-in tariff at the higher rate for 25 years.
