These days, it’s difficult to work out where to invest your money to earn good interest and know that your cash is safe. The feed-in tariff scheme is probably the best investment around and it’s guaranteed by the UK government.
The scheme allows individuals and groups to invest in small scale low carbon electricity, and in return the government will provide a guaranteed payment for the electricity that is produced.
What is the feed-in tariff scheme?
Install renewable energy in your home and you’ll be able to take advantage of the UK government’s feed-in tariff scheme – a fantastic way to make money from green power.
It’s benefits are huge:
- you’ll be paid for the energy you generate – even if you use it
- sell any excess energy you produce back to the National Grid
- cut your standard energy bills by creating your own green energy
- import electricity from the grid if and when you need it
The UK feed-in tariff scheme is available for all types of renewable energy, including solar PV, wind, hydroelectric, combined heat and power units and anaerobic digesters. It’s especially attractive for solar power, with added benefits for using this well-proven renewable energy source.
Feed-in tariff payments
Feed-in tariff payments are so simple. The ‘Big Six’ energy suppliers are all required to pay them by law. You’ll need a special ‘Total Generation Meter’ in your home to monitor your electricity generation – make sure it’s installed along with your renewable energy system.
It’s important to remember that the payment is guaranteed by the UK government, so there is no worrying about whether you will receive your money.
Once you’re generating renewable electricity there’s two types of payment – the generation tariff and the export tariff. Plus, you will also benefit from the energy saving.
You’ll get paid for every kWh of electricity you produce. The rates are different for different kinds of renewable energy, when the system is installed and if it’s been installed by a certified supplier.
They’re index-linked and fixed for up to 25 years, depending on what kind of power you install. You’ll keep getting paid for all that time, making the scheme a real money saver.
You’ll get an extra 3.1p for each kWh you export back to the National Grid. So if you generate extra electricity it won’t be wasted and you’ll make money on it. You’ll probably get paid this way for about half of the electricity you generate.
Energy bill savings
You will not just make money from the tariffs, you’ll save money off your electricity bill as well because you’ll be generating your own clean energy. The amount that you save on energy bills will depend on how much electricity you use.
Big earnings and savings
To give you an idea of how much money the feed-in tariff scheme can make you, if you’ve got an average-sized solar PV (photovoltaic) installation of 2.9kWp you could get:
- more than £1,000 per year from the generation tariff
- £40 per year for the export tariff
- £90 savings off standard electricity bills
In fact, for an installation of 2.9kWp you would qualify for a total saving of around £1,190 per year, which is is a fraction less than £100 per month.
It’s likely that you will earn a minimum of between five and eight per cent guaranteed annual income across every year that you will receive payments. Whatever the actual figure, that’s a lot more than you will earn from a bank!
Of course, there is an initial investment for installing the renewable energy system, the costs of which you can check with your supplier. The actual income and profit you earn will be dependent on the costs of installation, the projected energy you produce and how much electricity you use at home.
On top of this, energy prices are on the increase and it’s inevitable that prices from energy suppliers will only get more expensive.
Solar feed in tariff
The solar feed-in tariff is particularly attractive. Solar PV power is clean, green, easy to install and effective even on cloudy days – and it’s the only renewable energy that’s guaranteed payments for 25 years.
Some within the industry believe that the opportunity for profits for Solar PV is very high, far exceeding the average for other renewable energy systems. David Hunt from Eco Environments says:
“Most people are looking at it [Solar PV] now domestically because they are going to get two or three per cent on an ISA or out of the bank account, but with the solar they can get 15%.”
He continues, most customers “like the fact that there are green benefits, but they are doing it because their energy prices are going in one direction very quickly”.
With solar PV, therefore, your potential income is up to 15%!
Solar PV is the most popular technology to take advantage of the government incentive. It’s an incredible deal and virtually anyone who’s got an unshaded rooftop can install solar PV panels and start taking advantage of the solar feed-in tariff.
Feed-in tariff wind
It’s not just all about solar power though. Wind power is one of the other renewable power types eligible for the financial incentive and wind turbines are excellent choices if you live in a suitable area.
You’ll need to be in a windy location and away from obstacles of course – so it’s particularly good for exposed, remote areas where the feed-in tariff for wind power can come into its own.
Feed-in tariff rates
Feed-in tariff rates are all attractive and bring big benefits, and depend on:
- the type of renewable energy system
- when it’s installed
- how much energy you produce
- if you’ve used a Microgeneration Certification Scheme (MCS) certified installer
They’re particularly attractive for solar PV. It’s very important to note that you’re installer must be accredited to the MCS, otherwise you will not get the payments.
The table* below shows feed in tariff rates stated by the Department of Energy and Climate Change (DECC) from 1st August 2011 to 31st March 2012.
|Energy Source||Scale||Generation Tariff (p/kWh)||Export Tariff (p/kWh)||Duration (Years)|
|Hydro||>15 – 100kW||18.7||3.1||20|
|Hydro||>100kW – 2MW||11.5||3.1||20|
|Hydro||>2 kW – 5MW||4.7||3.1||20|
|Solar PV||≤4kW new||37.8||3.1||25|
|Solar PV||≤4kW retrofit||43.3||3.1||25|
|Solar PV||>4 – 10kW||37.8||3.1||25|
|Solar PV||>50kW – ≤150kW||19.0||3.1||25|
|Solar PV||>150kW – ≤250kW||15.0||3.1||25|
|Wind||>1.5 – 15kW||28.0||3.1||20|
|Wind||>15 – 100kW||25.3||3.1||20|
|Wind||>100 – 500kW||19.7||3.1||20|
|Wind||>500kW – 1.5MW||9.9||3.1||20|
|Wind||>1.5MW – 5MW||4.7||3.1||20|
|Exisiting generators transferred from RO||9.4||3.1||to 2020|
Source: Good Energy
Feed-in tariff – why wait?
Renewable energy is not only good for the environment, it’s good for your pocket too. Saving money on your energy bills is only the start – the feed-in tariff means you could be earning £1,000s.
So what are you waiting for – get producing renewable energy and join the scheme today.
Image courtesy of flickr – uSwitch