What Are Feed In Tariffs?
Feed-In Tariffs (also known as FITs) are the electricity part of what some people call Clean Energy Cashback, a scheme that pays people for creating their own "green electricity". The second part of the scheme is the Renewable Heat Incentive, a similar measure for heat.
The tariffs have been introduced by the Government to help increase the level of renewable energy in the UK towards our legally binding target of 15% of total energy from renewables by 2020 (up from under 2% in 2009).
How do the Feed-In Tariffs help?
The Tariffs give three financial benefits:
A payment for all the electricity you produce, even if you use it yourself
Additional bonus payments for electricity you export into the grid
A reduction on your standard electricity bill, from using energy you produce yourself.
Who are they for?
Broadly speaking, the FITs are for everyone, including households, landlords, businesses and even organisations such as schools and care homes.
Feed-in Tariffs were introduced on 1 April 2010 and replaced UK government grants as the main financial incentive to encourage uptake of renewable electricity-generating technologies. Most domestic & Commercial technologies qualify for the scheme, including:
Solar electricity (PV) (roof mounted or stand alone)
Wind turbines (building mounted or free standing)
The UK Government's Department for Energy and Climate Change (DECC) makes the key decisions on FITs in terms of government policy. The energy regulator Ofgem administers the scheme.
Your energy supplier will make the FITs payments to you. The large energy suppliers are required by law to provide them; smaller suppliers are not, but many have opted to offer them anyway. Visit Ofgem for a list of FITs-licensed suppliers.
For you to qualify for FITs, the installer and the products you use must both be certified under the Microgeneration Certification Scheme (MCS), except hydro and anaerobic digestion which have to go through the ROO-FIT process. The tariffs you receive depend on both the eligibility date and, for solar PV, your property’s Energy Performance Certificate (EPC) rating.
FITs rates for Solar all depend on your Energy Performance Certificate (EPC)
What is a commercial EPC?
A commercial EPC is a certificate issued against a non-domestic property, giving the property an energy rating and an outline of energy efficiency improvements that could be carried out, as highlighted in the recommendation report. The cost of the EPC will vary depending on the type and size of the property, and they are a little different and generally more expensive than a domestic EPC. You can find out all about commercial EPCs here.
Feed In Tariff Rates
BEST COMPLIANCE KEY FACT
The tariff period (lifetime) is now 20 years.
The tariff period is 20 years for hydro and wind, 10 years for micro-CHP.
BEST COMPLIANCE KEY FACT
Evidence of a property’s EPC rating is not required for Hydro, Wind & CHP technologies
A commercial property is more likely to have a larger PV or wind system than a domestic property – for a couple of good reasons: the property will often be larger and have bigger roof space (although not always) and it will often require more energy than a domestic property, especially during daylight hours when PV is most effective.
Imagine a store with rows of large freezers running all day long, and fluorescent lighting on all day because the daylight is insufficient. That is a lot more energy use than an average house, especially during daylight hours when many people are out and not at home. It means that solar PV is a great option for business, and large systems, where possible, will provide excellent returns.
You need about 4 panels to generate a kW of power, so anything over a 16 panel system is likely to fall in to the 4-10kW range. You would need 40 meter square panels to get up to a 10kW system, at a cost of around £15,000 or more, so chances are most business will fall into the 2 lower tiers, unless you have some serious roof space.
Does solar photovoltaic (PV) make sense for business
Solar normally pays back within 8-10 years of installation, which usually falls within the period businesses would consider worthwhile. For some businesses who would use close to 100% of the energy generated (I.e. those with high base loads during daylight hours such as offices and shops), the payback may be even quicker. Unfortunately, the feed in tariff is paid over 20 years, for both residential properties and business – which most businesses don’t tend to budget for. There are plenty of businesses that will benefit however.