The Feed-in Tariff
The Government launched the Feed-in Tariff on 1 April 2010; this consists of a payment for every unit of electricity that is generated by solar PV systems and an additional payment for exported electricity.
The Feed-in Tariff pays a tax free income to domestic households and an index-linked payment for both commercial and domestic installations. On top of this, solar PV generated electricity also produces substantial savings on your standard import / supply bill.
Who is eligible?
Short answer; everyone! All PV installations under 5MW, private and commercial are eligible. On the commercial side, the feed-in tariff will encourage PV installations among farmers, rural businesses, small and medium enterprises, where PV installations can be linked to other rural development programmes and enterprise grants.
Generation tariffs for new solar PV installations
The Feed-in Tariff is currently reviewed every 3 months, and depending on the current level of deployment the payments will change. For the most up-to-date tariffs please visit the Ofgem website here: Ofgem Feed-in Tariff
How does the Feed-in Tariff work?
Currently you will typically be paying around 15 pence per unit (kWh) to import electricity. A solar PV array will only produce electricity in daylight hours, obviously, you will still need to import electricity at night time, excessive use during direct sunlight or moderate use on cloudy days. If you invest in a PV system, every unit generated by your PV array will be logged on your new generation meter before the electricity can go anywhere else. You will get paid >4.32 pence for every unit generated (until the 30th of June 2016), regardless of what happens to the electricity after that. If you are using the electricity as it's being generated; you get paid 4.32 pence per unit, then make a saving of 15 pence as you do not have to import the required electricity, totalling 19.32 pence per unit. If you are not using the electricity, it gets exported to the grid; for this you receive an additional 4.91 pence, totalling 19.32 pence per unit.
How long will it last?
Once a PV system is commissioned, the tariff applicable to that date is guaranteed for 20 years and will rise in subsequent years. The Feed-in Tariff is also indexed-linked to inflation which means, the FIT rate secured on commissioning date will increase on April 1st every year. Energy prices will continue to rise much faster than inflation (increasing return on investment) and a solar installation will also increase the value and saleability of your house.