New Feed-In Tariff Announced for UK Homeowners

Those investing in renewable technology from 1^st April this year are to be rewarded by the Government’s new feed in tariff with cash incentives of up to £900 per installation.

Rewards will be backdated to any installations put into service since July 2009, when the scheme was first announced.

Ed Miliband, Secretary of State for Energy and Climate Change for the UK Government said:

“The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living.

“The feed-in tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past.

“It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology.”

The UK currently generates 5.5% of its electricity from renewable sources and small scale sources are on target to produce around 2% by 2020.

How the tariff will work:

1. Anyone installing solar panels and turbines up to 5 megawatts will be paid for the electricity they generate, even if they use it in their own homes. The exact amount earned can vary vastly dependant on the system used (see table below).
2. This income will of course come on top of potentially drastic reductions in electricity bills. These savings will increase year on year as the price of grid electricity rises.
3. Any electricity you don’t use can be sold back to the grid or a private buyer. As part of the final scheme, income gained from installations by private households will be exempt from income tax.

Figure 1: Tariff levels by size of system/install type

Potential benefits for house builders:

Solar PV is seen as an easy way for home builders to meet the Code for Sustainable Homes targets. The tariffs demonstrated here will make the idea a much more cost effective solution.

Potential benefits for housing associations:

This will allow many housing association tenants to take control of their bills and lift them out of fuel poverty. In this case the tenant would be benefiting from cost savings and the housing association from the tariff.

Impact on commercial buildings:

Owners of commercial buildings will experience higher yields and lower electricity bills as a result of the tariff. These owners can use generated electricity, sell it or benefit from reduced electricity prices by using a third party system.

Impact for commercial developers:

Solar installations will differentiate new developments whilst also providing financial advantages for the prospective occupants.

An Increase in the Tariff

The final tariff levels were decided at slightly higher levels than those in the initial consultation, meaning that investors should expect a 5 – 8% return on investment.

Figure 2: Tariff levels after initial consultation and the final figures.

A promising step forward was also made in renewable heat generation, as an additional scheme which is due to be launched in 2011 was announced. The scheme will guarantee payments to those installing technologies like ground source heat pumps, biomass boilers and air source heat pumps. Savings for householders installing solar thermal technology are expected to be around £200 per year and for an air source heat pump £400. Rates of return are expected to be between 6 and 12%.

All projects in both schemes should be carried out using Micro-generation Certification Scheme (MCS) eligible products and installed by MCS accredited installers.

Greenworks supports the Government initiatives to increase the amount of renewable energy that Britain produces and likewise is at the forefront of sustainable technology to help businesses and homeowners reduce their carbon footprints.

February 24, 2010 in Green Energy Articles | Permalink | Comments (2 )