Feed-in Tariffs (FITs) are payments designed to encourage home-owners and businesses within the UK to generate green energy from renewable sources such as solar PV and wind turbines. They offer a genuine financial incentive to anyone using a renewable electricity generator with an installed capacity below 5MW.
The great attraction of FITs is the fact that they guarantee generators a long-term fixed price for the renewable energy they produce. The idea is to incentivise energy users to help the UK reach its target of generating 15% of total consumed energy from renewable sources by 2020.
The FITs incentive is easy to follow and has been designed to appeal in particular to first time generators – good news for everyone who is committed to green energy, especially those of us fortunate enough to live in Cornwall, Devon and the rest of the South West, where conditions are more favourable for photovoltaic (PV) and wind energy generation.
As an energy generator, you will receive both a ‘Generation Tariff’ and ‘Export Tariff’ – these will be paid by licensed energy suppliers.
The Generation and Export tariff is guaranteed for the lifetime of your project and is set for 20 years for Wind Turbine and Solar Photovoltaic (PV) projects respectively.
Renewable Energy is of course not all about the money – but it certainly makes a difference. The Feed-in Tariff incentive makes generating electricity profitable for the customer with a typical return in excess of 8%. The table below illustrates the Generation Tariff for different scales of solar energy and wind energy installations.
|Technology||Scale (kW)||Generation Tariff (p/kWh)|
|PV||≤4kW (new build)||16|
|PV||>250kW-5MW / Stand Alone||7.1|
|Wind||>1.5 – 15kW||21.0|
|Wind||>15 – 100kW||21.0|
|Wind||>100 – 500kW||18.0|
Please note that these figures are linked to the RPI and will therefore follow inflation.
Three sources of income for renewable energy generators:
To make things a bit easier, here is a case study from one of our local wind turbine installations (please refer to the diagram above throughout):
Gaia 11kW wind turbine generating 30,000kWh per annum
This demonstrates that the overall income per year is £8,775. With a total installed cost of approximately £60,000, the turbine presents a simple payback period of 7 years.