Cash for Clean Green Energy Generation

Feed In Tariffs

Feed-in Tariffs (FITs) first became available in Great Britain on 1st April 2010, and have recently been reviewed, now paying installers of solar systems guaranteed payments of 21 pence per unit of electricity generated for solar PV systems, (other rates apply to other technologies), but must be installed by an accredited MCS installer, such as Absolute Solar to qualify for payments.

Sunday Times: Solar Best Investment 2011

Under the Clean Energy Cashback scheme suppliers have to (compulsory for big six utility suppliers) make regular payments to householders and communities who generate their own electricity from renewable or low-carbon sources such as solar electricity panels (Photovoltaic Voltaic) or solar thermal system. Payback time varies on a wide-range of factors but is typically under ten years, with twenty-five years of guaranteed payments, makes installing a domestic solar system one of the top 5 investments to make according to the Sunday Times for 2011. That’s equivalent to 10.3% to 12.9% payback (at 40% or 50% tax payer) or a 15.6% or 18.2% real return (RPI is currently 5.3%) according to the Sunday Times.

Example of how Clean Green Energy Cashback works

About Green Energy Scheme

The scheme guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to the bill savings made by using the electricity generated on-site.

Once you have a microgeneration technology installed you should experience a monthly reduction in your electricity bill and then receive an income from your Feed-in tariff provider. However, if you have taken out a loan to pay for the installation you will have to make monthly repayments to your loan company.

Feed-in tariffs are designed so that the average monthly income from your installation will be significantly greater than your monthly loan repayment (with a 25 year loan).

The scheme covers the following electricity-generating technologies, up to an installation size of 4 Mega Watts:

• Solar electricity (PV) (roof mounted or stand alone)
• Wind turbine (building mounted or free-standing)
• Hydroelectricity
• Anaerobic digestion
• Micro combined heat and power (micro CHP) (limited to a pilot at this stage)

The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS* scheme. See below for further details

You will qualify for the full FIT payments if:

• It is installed after 1st April 2010 using an MCS* certificated product and installer;

* The Microgeneration Certification Scheme (MCS) is an independent scheme that certificates microgeneration products under 50kW and installers in accordance with consistent standards. Any commercial or larger scale systems, over 50kW, and all anaerobic digestion installations must apply directly through the Renewables Obligation Order feed-in tariff process for larger installations (ROO-FIT) process as they are not covered by the MCS. Information on the ROO-FIT process is available on Ofgem’s website.

How the scheme works

If you are eligible to receive the FIT then you will benefit in 3 ways:

1. Generation Tariff – a set rate paid by the energy supplier for each unit (or kWh) of electricity you generate. This rate will change each year for new entrants to the scheme (except for the first 2 years), but once you join you will continue on the same tariff for 20 years, or 25 years in the case of solar electricity (PV).

2. Export Tariff - you will receive a further 3.1p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn’t used on site. The export rate is the same for all technologies.

3. Energy Bill Savings – you will be making savings on your electricity bills , because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.

Income From Selling Electricity

Domestic FIT installations are likely to have their export deemed (estimated) at 50% in most cases until smart meters are rolled out.

A typical domestic solar electricity system with an installation size of 3kWp could earn:

• £530 a year from the Generation Tariff
• £40 a year from the Export Tariff
• £100 a year reduction of current electricity bills

Source EnergySaving Trust

This assumes 50% of the electricity generated is exported. The figure will vary depending on how much is exported.

Tariff Levels

For technologies installed between 15th July 2009 and 31st March 2012 the following tariff levels are in place.

Tariff levels vary depending on the scale of the installation.

The tariff levels shown in the table above apply to installations completed from 15th July 2009 to 31st March 2012 for the lifetime of the tariff. After this date, the rates decrease each year for new entrants into the scheme.

All generation and export tariffs will be linked to the Retail Price Index (RPI) which ensures that each year they follow the rate of inflation.

The tariff levels will be reviewed in April 2012.