Investors in Solar PV Systems Benefit from Feed-in Tariff

Since the introduction of the Feed-in Tariff (FiT) in April 2010, home owners, commercial property owners and communities installing solar PV are paid for all the electricity they generate, including the electricity that they use. This 'clean energy cashback' for retro-fitted installations up to 4kW is 15.44 pence* per kilowatt hour (p/kWh), for example, and is in addition to the savings on electricity bills. The rate will reduce from 1st July 2013.

The Department of Energy and Climate Change (DECC) has introduced the Feed-in Tariffs as part of the UK Government's drive to reach the target of 15% of energy coming from renewables by 2020.

If you are eligible to receive the FiT then you will benefit in 3 ways:

Generation tariff

A set rate paid by the energy supplier for each unit (or kWh) of electricity you generate. This rate is set as follows from 1st May 2013 and before 1st July 2013. Once your installation is commissioned and you join you will continue on the same tariff for 20 years. In the case of solar PV, current tariffs are as follows:

Any system up to 4kW new build or retrofitted = 15.44p* per kWh pay-back
Any system 4-10kW new build or retrofitted = 13.99p* per kWh pay-back
Any system 10-50kW new build or retrofitted = 13.03p* per kWh pay-back
Any system 50-100kW new build or retrofitted = 11.10p* per kWh pay-back

*Tariff rate based on EPC band D or higher, rate drops to 6.85p per kWh for band E or lower.

This tariff will change for eligible installations commissioned after 1st July 2013 and before 1st October 2013 as follows.

Any system up to 4kW new build or retrofitted = 14.90p* per kWh pay-back
Any system 4-10kW new build or retrofitted = 13.50p* per kWh pay-back
Any system 10-50kW new build or retrofitted = 12.57p* per kWh pay-back
Any system 50-100kW new build or retrofitted = 11.10p* per kWh pay-back

*Tariff rate based on EPC band D or higher, rate drops to 6.85p per kWh for band E or lower.

Export tariff

You receive a further 4.64p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn't used on site. Domestic FiT installations are likely to have their export estimated at 50% in most cases until smart meters are rolled out.

Energy bill savings

You make savings on your electricity bills , because generating electricity to power your appliances means you don't have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.

Clean Energy Cashback

As an example, a typical domestic solar PV system, with an installation size of 4.0kWp could earn around:

System Specification

4 kW producing 3,500kWh/year
FiT generation rate: 15.44p/kWh
FiT export rate: 4.64p/kWh
Grid price: 14.5p
System cost: £8,500

Savings and returns with Feed-in Tariff from 1st November 2012*

FiT generation payment: 3,500 x 15.44p = £540.40
FiT export payment: (3,500 x 0.5) x 4.64p = £81.20
Annual bill savings: (3,500 x 0.5) x 14.5p = £253.75
ROI: (540.40 + 81.20 + 253.75) ÷ 8,500 x 100 = 10.29%

*Assumes 100 percent efficiency, a south facing roof and 50/50 split between own use and export.

See also more on the Renewable Heat Incentive (RHI)