Feed-In Tariff

What Is It?

The UK’s ‘Feed-In Tariff’ is a government policy designed to encourage the uptake of renewable energy in the UK. The Tariff came into effect on the 1st of April 2010 and provides a financial incentive for generating renewable energy.

With the Feed-In Tariff you get

  • Paid money for generating renewable energy, whether you use it or not
  • Guaranteed payment for 20 years
  • Tax-free income
  • An estimated 5% rate of return based on government estimations
  • 4.64p export tariff (as of 1st July 2013) – for all the energy you don’t use
  • Free energy from your renewable energy generation

How Can I Benefit?

Let’s say you buy and install a 2.5kW PV system, which would cost around £5,000
A 2.5kWp PV system will generate about 2,125 units (kilowatt hours (kWh)) of electricity per year and the generation tariff is set at 14.90p per unit (as of 1st July 2013).

As well as receiving the generation tariff for every one of those units, you’ll typically use about half of that in your house, and export the rest to the grid, resulting in a payment for the exported units at 4.64p/unit. And, if you use half the electricity that is generated, you save buying regular electricity at 13p/kWh

Government’s current proposals and tariff structure example

Government’s current proposals and feed in tariff structure example
Income from generation tariff (2125 x 14.90p) £317
Income from electricity sales (1062 x 4.64p) £49
Savings on avoided electricity purchases (1062 x 13p) £138
Total annual income + savings £504

On your payment of £5,000 you could get back approximately 10% per year.

The amount might vary a little each year depending on electricity prices, but that’s a pretty healthy investment. Over the 20 years for which it is proposed the tariff is guaranteed, we estimate you’d earn over £10,000 based on this example, which will give you a modest profit on your original outlay. And the great thing about solar PV is its life span is even longer than the tariff, so you would carry on benefiting from free electricity for years to come.

Table of Feed-In Tariff levels

For current Feed In Tariff information, see: http://www.energysavingtrust.org.uk/Generate-your-own-energy/Financial-incentives/Feed-In-Tariffs-scheme-FITs

A complete listing of all Feed-In Tariff levels for system installed after 1st July 2013

 

 

Energy Source Scale Type / Rate Tariff
(p/kWh)
Listing of all Generation Tariff levels for the current period
Anaerobic digestion ≤250kW 14.70
Anaerobic digestion >250kW – 500kW 13.60
Anaerobic digestion >500kW 8.96
Hydro ≤15 kW 21.00
Hydro >15 – 100kW 19.60
Hydro >100kW – 500kW 15.50
Hydro >500kW – 2MW 12.10
Hydro >2MW – 5MW 4.48
Micro-CHP <2 kW (limited)
12.50
Solar PV ≤4 kW Higher rate
14.90
Solar PV ≤4 kW Medium rate
13.41
Solar PV >4 – 10kW Higher rate
13.50
Solar PV >4 – 10kW Medium rate
12.15
Solar PV >10 – 50kW Higher rate 12.57
Solar PV >10 – 50kW Medium rate
11.31
Solar PV >50 – 150kW Higher rate
11.10
Solar PV >50 – 150kW Medium rate
9.99
Solar PV >150 – 250kW Higher rate 10.62
Solar PV >150 – 250kW Medium rate 9.56
Solar PV ≤250kW Lower rate
6.85
Solar PV >250kW – 5MW 6.85
Solar PV ≤5MW Standalone
7.10
Wind ≤100kW 21.00
Wind >100 – 500kW 17.50
Wind >500kW – 1.5MW 9.50
Wind >1.5MW – 5MW 4.48

Notes:

[A]: These tariffs are index-linked for inflation.
[B]: This tariff is available only for 30,000 micro-CHP installations, subject to a review when 12,000 units have been installed.
[C]: These terms are defined as follows:

  • “Retrofit” means installed on a building which is already occupied
  • “New Build” means where installed on a new building before first occupation
  • “Stand-alone” means not attached to a building and not wired to provide electricity to an occupied building