Feed In Tariffs Explained:How Renewable Energy Can Pay

Solar, wind, hydro and anaerobic digestion can all get you guaranteed payments through Feed-in Tariffs (or FITs) and anyone who is a property owner can benefit. Still confused? Read on.

Feed-in tariffs (FITs) are, undoubtedly, one of the most complicated and confusing government schemes, but, if you can get through the terminology and jargon they can be very rewarding.

So, what are FITs?

The tariffs are payments to anyone who owns a renewable electricity system, per kilowatt hour they generate. The name “Feed-in Tariffs” is actually slightly misleading, suggesting the tariffs only apply to electricity you feed in to the grid. When actually you can also get paid for the energy that you use!

How much can I get paid and for how long?

This is where it can get confusing, there are different tariffs for different types and sizes of renewable energy systems, but all are paid per kilowatt hour (kWh). There are also two separate tariffs for energy generated (generation tariff), and energy put back into the grid (export tariff), just to add to the confusion.

The highest generation tariff is for retrofitted solar photovoltaic (PV) panels, which are fitted to a building already occupied, earning 41.3p per kWh. A certain incentive to get individuals and businesses involved in the scheme. You can then earn a further 3p for every kWh you don’t use but export instead. This is the export tariff, which is a flat rate at 3p per kWh for whatever renewable energy system you have.

Unfortunately this doesn’t last forever. Again, depending on which renewable energy system you have the figures can differ, but you can expect to receive the tariff for between 20-25 years. The Government think that this should cover the initial cost of installation and earn approximately 8% p.a. But this will obviously depend on how much energy you can produce.

How do I get a renewable energy systems installed?

Depending on the type(s) of renewable electricity system you want installed you need to speak to a supplier, who will install everything necessary for you to start making renewable electricity and money.

Luckily the Feed-in Tariff system avoided any cuts in the spending review earlier this year, despite intense speculation beforehand. The first review of the tariffs will be undertaken in 2012, effective from April 2013. This was always scheduled and with this government claiming to be the greenest yet, we can expect the tariffs to continue as planned.

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