Feed-in Tariff

The Government has proposed that from April 2010, anyone who is generating renewable energy (under 5MW) should be paid for everything they generate, including the units they use themselves.

The proposed rate for solar PV is as follows:

• Systems up to 4kWp (retrofit): 43.3p per kWh
• Systems up to 4kWp (new build): 37.8p per kWh
• Systems up to 4kWp - 10kWp: 37.8p per kWh
• Systems up to 10kWp - 50kWp: 32.9p per kWh
• Systems up to 50kWp - 100kWp: 19.0p per kWh

Stand alone systems (non-grid connected):

• Systems up to 100kWp - 250kWp: 15.0p per kWh
• Systems from 250kWp - 5MW: 8.5p per kWh

The feed-in tariff generates an income in three ways:

• PV microgenerators will be paid for every kWh or 'unit' they generate
• Get paid an additional guaranteed export rate for what is not consumed and sold back to the grid (wholesale rate, 3p per kWh)
• Plus you have significant savings on your electricity bill

For example:

Mrs Green wants a 3kW system installed on her south facing roof. The cost of installation for the full system will be around £14,000.

A 3kW system will produce approximately 2550 kWh per year, therefore Mrs. Green will earn around £1,053.15 for the total amount of electricity that the PV system generates, regardless of whether she uses it or not (41.3p x 2550kW).

£357 in savings made through not having to buy electricity. This assumes that electricity is bought from the grid at 14p per kW. As energy costs rise, this saving will become even greater (14p x 2550)

= £1,410.75

So Mrs. Green would have a pay-back over 25 years of £35,268.75 that's a profit of £21,268.75 and it is all TAX FREE.