- In April 2010 the UK Government introduced Feed In Tariffs to encourage the installation of renewable electricity generating technology in all types of buildings across the UK. Under this scheme you are paid a fixed rate for every Kilo Watt Hour (kWh) of renewable electricity that you generate, regardless of whether you use the electricity yourself or not. For electricity that you do not use you will be paid an additional rate for every KWh that you “Feed back” into the national grid, whilst you will also save money on your electricity bills as you will purchase less electricity from your supplier. Technologies eligible include Solar PV, Hydro, Wind and Anaerobic Digestion. The Feed in Tarrif system is open to everyone including households, businesses, schools, hospitals, local councils, and community projects – in fact any renewable electricity project under 50MW. For a Renewable electricity generating system to be eligible for a FIT payment, they must be installed by an MCS (Microgeneration Certification Scheme) accredited company.
- The FiT has 2 payment components:
Generation Tariff: a fixed payment by your electricity supplier for each KWh of electricity you generate, regardless of whether you use it or not. The table for the Generation tariff is:
Export Tariff: a payment that has a floor price of 3.1p per kWh from your electricity supplier for each unit of renewable electricity that you generate but do not use and thereby “Feed Back” into the national grid. The amount that you feed-back into the grid will eventually be measured by Smart Meters, which will be installed in every house in the future under a Government scheme. However, until the use of Smart Meters is more widespread, the Government has set out that 50% of total electricity generation will be “assumed” to have been exported. The 3.1p/kWh is also a “floor” price, and renewable energy generators (i.e. participants in the FIT scheme) can negotiate higher Export Tariffs with their energy supplier
Let us assume you install 10 x 250W panels on your roof. This would give a Wp system size of 2500Wp – or 2.5kWp (Kilo Watt Peak). Using SAP 2005 we then estimate that your system will produce at least 2,100kWh of electricity every year.
Therefore, assuming you are on the standard domestic FiT tariff, you will receive a payment of 21.0p for every kWh that you produce:
21.0p x 2,100kWh = £441.00 = Generation Payment from FiT
Let us also assume that you only use 50% of the electricity you produce (this is what the Government allows you to assume until Smart Meters are installed in every home by 2014). Thus, by exporting the other 50% of the electricity you generate, you also get paid:
3.1p x 2,100kWh x 50% = £32.55 = Export Payment from FiT
Finally, if you are exporting 50% of the electricity you generate, you will therefore be using the other 50%. This electricity is free and replaces electricity you would otherwise have bought from your supplier. Assuming current electricity prices from your supplier are around 13p per kWh, you would therefore be saving the following from your annual electricity bill:
13p x 2,100kWh x 50% = £136.50 = Annual Reduction in Electricity Bill
Hence, in total you would make annual savings of:
£441.00 + £32.55 + £136.50 = £610.05 = Total Annual Savings
The £473.55 is a payment that is made from your ELECTRICITY SUPPLIER to you. Every time you get an electricity bill, it will show this credit (for quarterly bills the credit will be a quarter of this on each bill).
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