Feed In Tariff (F.I.T)
The Feed-in-Tariff was launched in April 2010 as part of the Government’s commitment to cutting carbon emissions by 20% before the year 2020. The scheme was launched to encourage householders, commercial property owners and agricultural landowners to be proactive in the uptake of photovoltaic technology.
The legislation provides for a tax free Feed-In-Tariff or FIT which obliges energy companies to pay a premium price to you, the energy generator, for all the energy produced by your Solar PV system, whether it is consumed at your property or exported back to the grid.
The Feed-in-Tariff rates last for 25 years, long after the system has paid for itself, with rates set to rise with inflation.
On February 9 2012 the Government announced changes to the Feed In Tariff scheme that came into effect from 1 April 2012. Changes are as follows :
All systems will now have to be installed or attached to a building with an Energy Performance Certificate (EPC) rating of D or above in order to qualify for the full FIT. A valid EPC certificate will be required as part of the FIT application.
The following tariff rates will apply for installations commissioned and registered for FITs from 1 April 2012.
| System Installed (kW) | Generation Tariff (p/kWh) | Tariff Duration (Years) |
|---|---|---|
| ≤4kw (New Build) | 21 | 25 |
| >4-10kw | 16.8 | 25 |
| >10-50kw | 15.2 | 25 |
| >50-100kw | 12.9 | 25 |
| >100-150kw | 12.9 | 25 |
| >150-250kw | 8.5 | 25 |
| >250kw-5mw | 8.5 | 25 |
| >Stand Alone | 8.5 | 25 |
The Feed-In-Tariff generates an income in three ways:
- 1. Tax free FIT payment for every kWh generated (Generation Tariff)
- 2. Additional payments for any energy that is not used on site and sold back to the grid (Export Tariff)
- 3. Significant savings from not buying energy – replaced by energy generated on site.
Feed-In Tariff Example
Mr Lighten lives in Devon and wants to install a Solar PV system. Currently he imports electricity from one of the UKs leading energy providers at 14p per kWh. His property has a south facing roof of 28m², allowing for a 3.92 kWp array made up of 16 industry leading panels.
Mr Lighten’s system cost £9,000 inclusive of VAT @ 5%
A 3.92 kWh array will have an estimated total output of around 3,000 kWh per annum according to Government SAP calculations. However as Mr Lighten lives in the South of England where there is a higher irradiation factor, it is likely that this system will generate more than the SAP based national average.
Mr Lighten should raise a revenue stream in Year One as follows
£723 in FIT payments for the energy he generates throughout year one, regardless of
whether he uses it on site or exports it back to the grid.
+
£193 made in savings though not having to import electricity. Assuming he uses 50% of
electricity generated and replaces electricity usually bought from the grid at 14p per kWh.
+
£51.64 for exporting excess yield not used on site back to the National Grid. This assumes
50% of electricity is exported at an export tariff of 3p per kWh.
Mr Lighten’s total tax free revenue in year one would therefore be
£967.64
After 25 years he will have earned a total of
£29,288
After 9 ½ years he will have
Made back the money he spent on the system
After 25 years Mr Lighten will have made a total profit of
£20,288
With the Feed-In-Tariff payments and associated savings Mr Lighten is now able to produce his own electricity and reduce carbon emissions. On top of that, Mr Lighten can also make a healthy return on his initial investment, at a higher return on investment rate than any ISA, Savings or Bank Account currently being offered. 
For more information or an informal discussion please contact us on 01392 254435 or e-mail us at enquiries@enlightensystems.co.uk.
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