Feed-in Tariffs and the Benefits of PV

The Feed-in Tariff is a government-backed scheme whereby those who generate electricity on a small scale from renewable sources receive special payments. It has three components:

(a) The Generation Tariff. The producer – that might be you! – will receive regular payments for each unit of electricity you produce, whether or not you use it yourself. This is much the greater part of the subsidy.

For photovoltaic (PV) systems the rates are as follows, in pence per kWh (or unit) of electricity generated:

System up to:	Installations registered after 12 December 2011
≤4 kWp	21.0
>4 - 10 kWp	16.8
>10-50 kWp	15.2
>50-250 kWp	12.9

In other words, if we fitted a 2 kWp system on your existing roof, you would receive 21 pence for every kWh generated. (kWh= kilowatt-hour; kWp stands for kilowatt-peak and is the power the system would generate under Standard Test Conditions). The units are measured by the generation meter that we install.

All PV payments are assured for 25 years, at the rates shown above.

Installations registered between 12 December 2011 and 1 April 2012 will receive the earlier, higher rates until 1 April, then move to the above tariff. The earlier tariffs were 43.3 p (< 4 kWp, retrofit), 37.8 p (< 4 kWp, new build), 37.8 p (4-10 kWp) and 32.9 p (10-50 kWp).

(b) The export tariff. For every unit that you supply to the grid, you will receive an extra 3.1p (the export tariff). Until the advent of smart meters, electricity companies are paying the export tariff on 50% of the energy your solar PV array generates irrespective of how much you use, at least on small installations, because without a third meter it is not possible to measure how much power you export to the grid.

(c) Savings on your electricity bill. For every unit that you produce and use yourself, you will of course save on your electricity bill. Most domestic consumers are paying around 12-15 pence/unit.

Who will make these payments?

Your electricity supplier has to pay you the amounts in (a) and (b) above. We will register your installation with the Microgeneration Certification Scheme and you then apply for the Feed-in Tariff from your electricity supplier. We will help you ensure payments are made correctly and promptly.

Will these payments increase?

Yes! The generation and export tariffs are presently linked to the Retail Price Index (RPI), so will increase each year. Also the savings on your electricity bill will increase as electricity prices continue to rise.

In a domestic property where the electricity is generated mainly for internal use, the FITs payments wil not be treated as income for the purpose of income tax. This is especially good news if you are a higher rate taxpayer!

Who is eligible to receive these payments?

Everyone – "individuals, householders, organisations, businesses and communities who have not traditionally engaged in the electricity market", according to the government. DECC say that "Generators may, if they wish, assign the rights to their FIT payments to another body through a contractual arrangement." We interpret this to mean that roof-owner A can permit generator B to install solar panels on his roof, in return for rent, a share of the FIT or any other benefit.

However, the installation:

a) must be made by a company that is an approved installer for PV systems under the Government's Microgeneration Certification Scheme (MCS), such as Soltrac; and

b) must use panels that are also certified under MCS.

Some domestic-sized PV systems, their sizes, what they would generate, ...

 

Power	No panels	Width	Height	Area	Output
1.92 kWp	2 rows of 4 240-watt panels	4.06 m	3.31 m	13.4 sq. m	1648 kWh/year
2.88 kWp	2 rows of 6 240-watt panels	6.09 m	3.31 m	20.2 sq.m	2472 kWh/year
4 kWp	2 rows of 8 250-watt panels	8.06 m	3.31 m	26.7 sq.m	3434 kWh/year

What they would cost and the estimated income they would provide

Power	Soltrac indicative cost	% of power used (for FIT)	% of power used (actual)	Year 1 FIT & savings	Total FIT & savings (25 years): Scenario A	Total FIT & savings (25 years): Scenario B	Return (Year 1)
1.92 kWp	£7500	50%	75%	£519.94	£14,041	£20,628	6.9%
2.88 kWp	£9000	50%	50%	£705.76	£18,687	£27,403	7.8%
4 kWp	£10,500	50%	50%	£980.41	£25,959	£38,067	9.3%

These figures are based on the government's SAP system for calculating how many kWh of energy a system of a given size will produce in a year. In reality, Soltrac customers are achieving 10-20% more output (18.8% above SAP cumulatively to 1 November 2011), and hence 10-20% more return. This is not surprising because the SAP calculation is based on measurements at Sheffield, but our customers are in the south of England, where solar radiation is signficantly higher.

'Soltrac indicative cost' assumes an on-roof system and no major complications with the existing consumer unit and cable run. Ground-mounted systems cost more. Output is based on panels at 30º inclination, unshaded, facing south, and is calculated using the Government's SAP system (Appendix M).

Two figures for the percentage of power used are needed to calculate the FIT due and the savings. The left hand figure is the standard adopted by the electricity companies and so determines the export tariff paid. The right hand figure (actual) determines the savings on your electricity bill.

Scenario A: Assumes no inflation, electricity prices rising at 2% per year.
Scenario B: Assumes inflation at 3% p.a., electricity prices rising at 5% per year.

The FIT totals above, the total benefit over the 25 year period, include the amount saved on your electricity bill, based on a present electricity price of 12p/Kwh.

Remember that the above figures are for optimal conditions. Shading and orientation other than south can reduce the output considerably. We can run a precise simulation for you.

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© Soltrac, November 2011