Solar PV Feed in Tariffs (FiTs) explained

The Feed in Tariffs (FiTs) scheme, also known as the Clean Energy Cash-back Scheme is designed to encourage more people to generate their own renewable energy from sources that release less CO2 than buying from national electricity generators who burn fossil fuels to produce energy releasing greenhouse gases. Government Feed in Tariffs pay you for every unit (kWh) of electricity you generate (the generation tariff) plus an extra payment for electricity you generate and export back to the National Grid (the export tariff).

On average the Feed in Tariffs, plus savings made by using the electricity you generate mean that the capital cost of installing a Solar PV system is recovered within 5 – 8 years.  This means that if you invest in a Solar PV system you can be sure to recover your investment.  After the capital investment is recovered your Solar PV system will produce you a profit for the next 15 – 20 years.

This is as true now as it was when the Feed in Tariff incentives were launched in 2010.

For further information on the ecomonic argument for Solar PV click here.

Length of the Solar PV Feed in Tariffs contract

Solar PV payments are set at the rate prevailing at the time the generating equipment is installed and registered and are guaranteed for 25 yrs.  Feed in Tariff payments for domestic installations are tax free.  The FiTs contracts are index linked increasing annually by the Retail Price Index(RPI)rate of inflation.

The level which Government deemed would stimulate investment in Solar PV was set at approximately 8% return on investment when the FiT scheme was launched in April 2010.  This target ROI has been maintained as the FiTs scheme has evolved.

Climate Change

As a result of the United Nations Framework Convention on Climate Change (UNFCCC) protocol aimed at fighting Global Warming negotiated in Kyoto “The Kyoto protocol”, the EU has agreed targets to reduce Green house Gases (GHGs) emissions. For more information see our Kyoto Protocol page.

Current Solar PV Feed in Tariffs

Please follow this link to the Energy Savings Trust web site where you will find full details of the current generation and Export FiT rates.  More information on Feed in Tariffs can also be found on the Department of Energy and Climate Change (DECC).

 

Tariffs for solar installations up to 250kW from 3rd March 2012

After a period of uncertainty, caused by Government mismanagement of the Feed in Tariff Scheme a new tariff rate of 21p/kWh came into effect for domestic size solar panels with an eligibility date on or after 3 March this year. Other tariff reductions also apply for larger installations. See table 1 below:

Table 1: Solar PV Feed in Tariffs from 3rd March 2012

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Band (kW) Generation tariff until 31 March 2012 (p/kWh) New generation tariff from 1 April 2012 (p/kWh) Multi-installation tariff from 1 April 2012 (p/kWh)
≤4kW(new build) 37.8 21.0 16.8
≤4kW (retrofit) 43.3 21.0 16.8
>4-10kW 37.8 16.8 13.4
>10-50kW 32.9 15.2 12.2
>50-100kW 19 12.9 10.3
>100-150kW 19 12.9 10.3
>150-250kW 15 12.9 10.3
>250kW-5MW 8.5 8.9 8.9
Stand alone 8.5 8.9 8.9

 

Tariffs for solar installations up to 250kW from 1st August 2012 

Since the introduction of the 21p/kWh rate, the UK Government has announced that FITs for solar PV will be reduced from 1st August 2012 and that the rates for other renewable energy technologies (apart from micro-CHP) should be reduced (or stay the same) from 1st October 2012.

Table 2: Solar PV tariffs for systems installed on or after 1st August 2012

Band (kW) Standard generation tariff(p/kWh) Multi-installation tariff (p/kWh) Lower tariff (if EPC not met) (p/kWh)
4kW (new build)  16.0 14.4 7.1
4kW (retrofit)  16.0 14.4 7.1
>4-10kW  14.5 13.05 7.1
>10-50kW  13.5 12.15 7.1
>50-100kW  11.5 10.35 7.1
>100-150kW  11.5 10.35 7.1
>150-250kW  11.0 9.9 7.1
>250kW-5MW  7.1 n/a n/a
stand-alone  7.1 n/a n/a

A full table of eligible technologies and their FITs is available on the Dept of Energy and Climate Change Website (DECC).
Minimum energy efficiency requirement for properties claiming FITs for solar PV

DECC has also put in place a minimum energy efficiency requirement for anyone wanting to install solar panels on their building and claim the full FIT rate. From 1 April properties will be required to produce an Energy Performance Certificate(EPC) rating of ‘D’ or above to qualify for the full FIT rates.

The tariff levels for properties meeting the requirement are as set out in Table 2 above. Where properties do not meet the requirement, they will receive 9p/kWh (apart from >250-5MW and stand-alone installations, which always receive 8.9p).

 

Other changes:

 

  • The export tariff increases from 3.2p to 4.5p/kWh to reflect the value of electricity exported to the national grid.
  • The feed-in tariff’s time-span is reduced from 25 to 20 years for new solar installations, bringing solar in line with most other technologies and reducing the overall costs of the FiTs scheme.
  • The Government will reduce tariffs by 3.5 per cent every three months, although rapid uptake could see reductions up to 28 per cent.
  •  These quarterly changes to be announced with two months notice.
  • Tariff cuts will be skipped for up to two quarters if uptake is low
  •  Organisations with more than 25 solar PV installations will get 90 per cent of the standard applicable tariff, reflecting the costs involved for these projectsRPI index-linking of generation tariffs to be retained.
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