Feed-in Tariff (FIT)

Feed-in Tariffs (FiTs) were launched in the UK on 1st April 2010, and with PV FIT offer you a typical Tax Free annual return on investment of approx. 8-12%, Government guaranteed for 20 years!

Solar feed in tariffs guarantee that your chosen energy supplier will pay you an above market rate for all the energy your PV Fit system generates over a [1] 20 year period. The main benefits are:

  • Any income/savings you receive as a result of installing Solar PV equipment is Tax free (for homeowners)
  • Your tariff rate is guaranteed by the UK Government for 20 years
  • Your tariff rate is linked to RPI so will rise year on year with inflation
  • Earn a return on investment better than any ISA!

The Feed-in tariff is designed to generate an income in three ways:

  1. You get paid a ‘generation tariff’ for all the energy that you generate (Generation tariff), whether you use it or not
  2. You get an additional ‘export tariff’ for any surplus energy that goes back to the grid (this is standard estimate of 50% of every meter reading)
  3. You save money at your current electricity rate, typically 14p/unit for all the solar electricity you use

The current published tariff rates are:

Notes:

These tariffs are index-linked for inflation (see below). Please note any systems installed before 1st November 2012.

Terms from the table are defined as follows:

“Retrofit” means installed on a building which is already occupied. “New Build” means where installed on a new building before first occupation. “Stand-alone” means not attached to a building and not wired to provide electricity to an occupied building

With new degression system tariffs will automatically by reduced by a minimum of 3.5% each quarter, unless installation volumes are lower than a preset trigger volume where they will stay the same for max. two consecutive quarters.

Once a system has been registered, the tariff levels are guaranteed for the period of the tariff and index-linked (see below). For systems registered in future years, some tariff levels will be adjusted to account for expected reductions in system prices, as further described here. For household customers producing energy mainly for their own use, the tariff income is also free from income tax.

Index Linking

The FITs are index linked to RPI. Both 2011 and 2012 adjustments were at 4.8%.

Other things you need to know about FITs…

The FIT rates are scheduled to be reduced again by 3.5% for system <50kW on 1st November 2012, and each quarter thereafter should deployment rates reach preset levels.

Multi-installation tariff rates for aggregated solar PV schemes i.e. where a single individual or organisation owns or receives FIT payments from more than one PV installation, located on different sites. FIT rate reduction in these circumstances is 90% of the FIT band rate relevant to the size of the installation.

Minimum energy efficiency requirement for FITs for solar PV requires an Energy Performance Certificate demonstrating a level D, or above, with the pv system installed. Any building not achieving the minimum rating will be paid FITs at the lowest available rate.

Exactly how much could FIT earn for you? Here’s an example…..

  • A typical household uses approx. 3300kWh of electricity per year (source Ofgem report)
  • A 4kW PV fit system installed on an unshaded South facing roof at 30 degrees tilt in the UK will deliver approx. 3434 kWh per year
  • Your system will cost [2] approx. £8,500 including 5% VAT (subject to survey)
  • FIT (@16p/kWh)= £550 [3]
  • Your savings from bought in energy = £240 [4]
  • Solar energy sold back to the grid = £77 [4]
  • Total income & savings = £867
  • Your system will have an estimated payback of [5] 9.8 years!

There’s never been a better time install a PV FIT Solar PV system on your home or business. Contact us today for your Free Solar Survey, or call us free on 0344 567 9032.

Notes:

[1] Typically, the power output of PV modules is warranted for 25 years. Their life span is considerably longer; up to 40 years according to some manufacturers. It is possible you may need to replace your inverter during the first 25 years, this should cost no more than £500 – £1000.

[2] The price of installing a PV system is averaged in the example above. You could pay more or less than £8,500 for a 4kW system depending on the technology you choose and how complex the installation is.

[3] In the example, we assume the solar panels are mounted on an unshaded roof at 30 deg tilt and have calculated estimated energy generated using Building Regulations Standard Assessment Procedure (SAP 2009).

[4] The Energy Savings Trust assumes that 50% of PV-generated electricity is used by the homeowner and 50% is exported. The example uses the governments consultation rates of 14p per unit of bought in electricity, and 4.5p per unit of solar electricity exported. FIT & export figures may be subject to change.

[5] This is a basic return on investment calculation and only takes into account year 1 tariff rate. We would expect, but do not guarantee, that economic payback would be faster when factoring in annual RPI adjustments (for 2010 and 2011 this was 4.8%), and energy price inflation (which at time of publishing is 10%). PV Fit Ltd is not a financial services company, so the example above is indicative only. Customers wanting to compare solar PV as an investment or security should contact us to be put in touch with our partner IFA’s. Please note that the tariff legislation only covers Great Britain; Northern Ireland is excluded.