Green Energy: what's eligible for the Feed-In Tariff scheme?
Why has the government introduced the Feed-in Tariffs?
We know it sounds too good to be true, but the Government has had to introduce these new measures in order to encourage people to install their own renewable energy systems and help them meet their climate change targets; the Government is aiming to increase the level of renewable energy in the UK to 15% of total energy by 2020 (up from under 2% in 2009).
Who pays for the Feed-in Tariffs?
Government legislation guarantees a fixed, premium rate for renewable electricity for each unit that is generated. The system is administered by the official regulator Ofgem and the Feed-in Tariffs are paid by electricity suppliers. The electricity suppliers are obliged by the Government to buy the renewable electricity. The electricity supplier passes on the cost of the Feed-in Tariffs to their customers.
I have heard there is a similar Government Scheme for generating renewable heat: is this true?
Yes it is true. The Government is proposing to introduce a scheme for renewable heat, which is called the Renewable Heat Incentive, and is due to start in April 2011. This is a payment you will receive for generating heat from renewable sources and includes Solar Thermal and Biomass Boilers. It is similar to the Feed-in Tariff for electricity generated from renewable sources.
Can I use the electricity I generate myself?
Yes, under the Feed-in Tariff scheme, you are paid a fixed rate (up to 41.3p/kWh), depending on the type of installation and its size, for every unit of electricity you generate, whether or not you use it yourself. This part of the Feed-in Tariff is known as the Generation Tariff. You are free to use the electricity you generate, which will then reduce your energy bills as you will not need to purchase as many units of electricity from your normal supplier. In addition, you will be paid a minimum of 3p/kWh for any electricity you generate that you do not use yourself and export to the national grid (this is known as the Export Tariff).
Do I have to pay tax on the income I receive from the Feed-in Tariff?
It was announced in the Pre-Budget Report 2009 by Alistair Darling that income from the Feed-In Tariffs will be free of income tax for householders who install systems primarily for their own use. Companies will be subject to Corporation Tax on their tariff income. Here is a quote from the Chancellor's speech: "From April, people with a home wind turbine or solar panels who plug their excess power into the national grid, will receive on average £900 a year. I intend to make this payment tax free."
Feed-in tariffs are worth on average £900 in 2010 for households and this means that for those householders paying the basic rate of tax, a further saving of £180 in 2010 will be made on that income. There would be an even greater saving for higher rate tax payers.
For how long are the Feed-in Tariff rates paid?
The Feed-In Tariffs will be paid for a period of 20 years from the date the system is first registered, except for solar photovoltaic systems where the period is 25 years.
Are the payments guaranteed?
Yes, the Feed-in Tariffs are guaranteed for 20 years (25 for Solar PV). Once you've been allocated a tariff, that rate would apply for the full 20/25 years. You will receive the rate which is applicable at the time you are accepted onto the Feed-in Tariff Scheme for the full 20 or 25 years. The Feed-in Tariffs are index linked to the retail price index.
What is degression?
You will receive the rate applicable when you register your system for the full 20/25 years. However, the Generation part of the Feed-in Tariff will drop every year after April 2012 for newly installed systems. The government has set these levels to encourage people to install renewable energy systems sooner rather than later. For example, the Generation Tariff is set at 41.3p/kWh for retro-fitted Solar PV for systems no larger than 4kW registered by April 2012. Any of these Solar PV Systems installed after April 2012 will only receive 37.8p/kWh, and there is a further 8% reduction each year after this for new systems. So to get the best price for the electricity you generate over its lifetime, install your system now or before 2012. The Export Tariff (the amount you earn in addition to the Generation Tariff for any electricity you don't use and export to the national grid) is not subject to degression and is fixed at approximately 3p/kWh.
What is MCS?
The Microgeneration Certification Scheme (MCS) is an independent scheme that certifies microgeneration products under 50kW and installers in accordance with consistent standards. In order to qualify for Feed-in Tariff, the renewable energy equipment must be certified by MCS and the installer must be accredited under the Microgeneration Certification Scheme. BritishEco is a MCS accredited company.
Find out if you could install a solar power or wind power system. Contact BritishEco, a Feed-In Tariff approved supplier