Is generating your own energy still right for you? FiTs can make it make sense, money-wise..
Microgeneration technologies are not ‘off the shelf’ products. The suitability and size of a system for your home will depend on the type, age and location of your property, the fuel you currently use and your average energy consumption – amongst many other variables.
The right technology, properly installed in the right location can provide a low-carbon, low-cost means of powering your home that pays for itself and provides you with an income stream at the same time
But, given the complexities involved, and considering that setting up an installation to generate your own electricity needs a capital outlay, you should think long and hard before deciding which – if any – is suitable for you and ensure that the conditions are right
Seeking professional advice from an impartial body such as the Energy Saving Trust is a useful first step, but that may not always be straightforward to understand. The EST will quite correctly say that before you do anything else, you should make sure that you’ve explored energy efficiency options, such as insulation, that will reduce the quantity of electricity you need to consume
A reliable source of information to help YOU understand what these ‘right’ conditions look like – applied on a home-by-home basis – isn’t easy to come by - and you need to be certain you have the correct facts to fill the information gap before investing your thousands
Below you will find details of the subsidy, the Feed-In Tariff also known as the Clean Energy Cash-Back, set up in UK by the government, that will make the concept of generating your own electricity worth having a look at..
Energy Minister Greg Barker claimed the reforms to payments for small-scale solar would mean a bigger scheme that could deliver an "extraordinarily ambitious" 22GW of panels - the equivalent of 3.3 million installations for homes and businesses.
Mr Barker said the changes were about creating a scheme "for the many", which would deliver better value for consumers who pay for the subsidies on their bills and put solar on course to be a competitive alternative to fossil fuels.
Decc estimates that the new system will deliver 620,000 new installations up until 2015 for £500 million, far less than the £1.7 billion cost of the 250,000 solar projects already installed.
Mr Barker said: "Our new plans will see almost two-and-a-half times more installations than originally projected by 2015 which is good news for the sustainable growth of the industry.
"We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long-term, predictable rate of return that will closely track changes in prices and deployment."
Green MP Caroline Lucas said the new Lib Dem Energy Secretary Ed Davey should have delayed the solar policy change and got it right, warning that the proposals could see tariffs reduced as often as every two months.
Extracted from The Independent 9 February 2012 Full article
How feed-in tariffs (FITs) work
The UK 'feed-in tariff' (also at one time known as the Clean Energy Cash Back) is a government-backed policy that was introduced to encourage householders to install solar PV systems to generate electricity
The feed-in tariff scheme rewards you for the amount of energy your PV system generates, regardless of whether you consume the electricity or not. You are also paid for any electricity exported
Benefits of feed-in tariffs
As a householder, you will be paid the generation tariff of 21p for every single kWh of electricity that is generated by your solar PV system. Even if you use the electricity to power your home, you will still be paid the 21p.
If you use your generated electricity to power the lights and appliances in your home, you will also save around 13p for each kWh since you will not have to buy at that price the electricity from your energy supplier. Altogether, the total benefit to you is some 34p.
Any electricity that is not used in the home will be exported to the National Grid (where your mains electricity comes from), for which you will be paid the export tariff of an additional 3p/kWh
The feed-in tariff (both generation and export tariff) is guaranteed for 25 years
In addition, each year the feed-in tariff will increase by the Retail price Index (RPI)
These tariffs levels are only paid if you install your solar PV system before April 2012. For systems installed after April 2012, the tariffs are reduced by 8.5% for each year that you delay. So there is a real incentive to install your solar PV system now
Any income generated will be completely tax free
Notes
Energy output is assumed at a UK average of 850 kWh per kWp of installed PV, with panels orientated south on a 30 degree pitch roof, with little or no overshading
A current average UK electricity rate of 13p/kWh is assumed and energy inflation is set at 6% a year over the 25 years, which is consistent with the last 10 years (BERR, June 2009)
Annual household electricity demand is set at 3,300 kWh and 50% of electricity generated by the system is exported
RPI is set at 3% and raises the feed in tariffs only
Summary
The householder receives 3 separate benefits
Generation tariff: A fixed price for each unit of electricity generated by the system, whether used in the home, or exported. This price is guaranteed for 25 years and will rise with the rate of inflation each year. A fullsize standard installation of 4kWp (generating 3,600 kWh/year) would provide an income from the subsidy payment of some £760 a year
Export tariff: A fixed price for each unit of electricity generated by the system that is exported to the National Grid. This price is guaranteed for 25 years and again will rise with the rate of inflation each year. In this example, this provides an additional income of £108 a year
Avoided costs: These are the savings from reducing the amount of electricity you need to buy from the Grid by using the electricity generated by the solar PV system. This provides lower bills and the additional benefit of being partially protected from future price rises in electricity. The amount you can save will depend on your Usage Profile - ie are you at home all day.. this may provide, in a standard household, a saving of £139 a year
