The Feed-in-Tariff
What are Feed-In Tariffs?
The Feed-In Tariffs are based on the electricity generated by a renewable energy system which is used in the property. There is also an additional bonus for any energy produced which is exported to the electricity grid.
At times when you are producing less electricity than you are using, the shortfall will be imported from the grid and you will pay your electricity company for this in the usual way.
The Feed-In Tariffs give you three separate financial benefits:
- A generation tariff payment, which is based on the total electricity generated and the energy type
- An export tariff payment, which is for any energy exports made when generating more than you use
- Lower bills from your supplier for the electricity you import from them
Who are they for?
Broadly speaking, the FITs are for everyone, including households, landlords, businesses and even organisations such as schools and care homes.
What renewable energy systems are eligible?
The most common technologies used in this scheme are Solar PV and Wind Turbine systems. Othersources include Anaerobic Digestion, Hydro-Electric and Micro-CHP.
Tariff Levels
http://www.fitariffs.co.uk/eligible/levels/
Generation and Export Tariff
The main benefit of the Feed-In Tariffs is the generation tariff, which is paid for every kilowatt hour of electricity produced. The amount paid per hour is determined by the type of technology and the size of the system.
The Feed-In Tariffs scheme also provides two further benefits: an additional payment for surplus energy exported to the grid (this is called the export tariff) and a saving on energy purchased from your electricity supplier.
What is the export tariff?
It is a bonus payment for every kilowatt-hour (kWh) of surplus electricity your system exports to the electricity grid.
When this payment is received you are effectively selling that electricity to the energy supply company, who can then deliver it to other customers.
This payment has been established to provide an incentive for energy efficiency as you will get paid extra for every kWh you don’t use but export instead.
How much is the export tariff?
A ‘floor price’ has been set in the legislation. For the year from 1st April 2011 this is 3.1p/kWhr. It is index-linked to the retail price index (having started at 3p/kWh when the scheme was introduced.
You are entitled to receive this or you also have the opportunity to opt out of this fixed price and try to negotiate a better rate with your electricity supplier. You have the opportunity each year to decide whether to accept the floor price or to opt out.
Unlike the generation tariff, this element will be the same whatever type of renewable energy is used.
How are the exports measured?
All the power flows relating to the tariffs will in due course be metered. However, in the initial years before Smart Meters are widely used, the export element will be deemed to be 50% of the power generated by the system.
Those generating electricity who believe their exports are substantially higher than this will be allowed to install suitable export meters and be paid on the metered level of exports.
The Renewable Heat Incentive
What is the Renewable Heat Incentive?
The Renewable Heat Incentive is a fixed payment for the renewable heat you generate yourself.
The Renewable Heat Incentive is similar to the Feed-in Tariffs, but there are some important differences, and in particular:
It will be paid for by the Treasury not by energy users.
There is no ‘National Grid for Heat’ and so importing and exporting heat is not relevant.
It will be introduced in phases, with residential schemes not eligible until Phase 2.
There are three steps to the RHI:
- Step One: you install in your property renewable heat systems such as solar thermal panels, heat pumps or a biomass boiler
- Step Two: you measure how much heat your renewable energy systems produce
- Step Three: you get paid a fixed amount based on that output, the type of technology and the size of the system
Who is it for?
Broadly speaking, the Renewable Heat Incentive is for everyone, including households, landlords, businesses, farmers, schools, hospitals, care homes and more.
However residential systems are not eligible for support until Phase 2.
Non-residential Installations
The following tariffs have been published for the initial phase of the scheme:
http://www.rhincentive.co.uk/eligible/levels/
All these tariffs are fixed for a duration of 20 years.
Residential Installations (Phase 2)
The tariff for domestic installations is not likely to start until October 2012, in line with the Green Deal (http://www.decc.gov.uk/en/content/cms/tackling/green_deal/green_deal.aspx).
As a result we do not know what the tariff levels will be.
Until then there is a grant scheme called the ‘Renewable Heat Premium Payment’ which can be given to households who have installed technologies after August 2011 and before March 2012.
| Heat technology | Payment per installation |
|---|---|
| Air source heat pumps | £850 |
| Biomass boilers | £950 |
| Ground source heat pumps | £1,250 |
| Solar water heating | £30 |
Will everyone be eligible?
Except for solar thermal, which is available to any householder, other technologies are only available for households not currently using gas heating.
Householders in England, Scotland and Wales can apply. They must certify that this is their main home and that they have basic energy efficiency measures in place (loft insulation to 250mm and cavity wall insulation, where appropriate).
Both the product and installer must be MCS (or equivalent) certified.
Note also that receiving a Renewable Heat Premium Payment does not automatically mean you’ll be eligible for RHI tariff payments.