Feed In Tariff
Feed in Tariff Update 19th January 2012
DECC has today laid before Parliament draft licence modifications which, subject to the Parliamentary process set out in the Energy Act 2008, makes provision for a reduced tariff rate (from 1 April 2012 onwards) for new solar PV installations with an eligibility date on or after 3 March 2012 under the Feed – in Tariffs scheme (FITs).
Energy and Climate Change Minister Greg Barker said:
“I know this is a difficult time for the sector and I want to do as much as I can to end the current uncertainty created by the legal challenge.
“We must reduce the level of FITs for solar panels as quickly as possible, to protect consumer bills and to avoid bust in the whole Feed-in Tariff budget. We’re appealing against the court ruling that’s challenged our proposal for a December reference date. This remains our aim, and we are waiting for the judgment of the Court of Appeal. But this is too important for us to sit and do nothing while we wait. Today we’re putting in place a contingency that will bring a 21p rate into effect from April for installations from 3 March.
“However, we are still pressing ahead with our appeal and if successful, we retain the option of introducing a December reference date. In the circumstances we believe this gives the industry as much certainty as is possible. And it puts us in a better position to protect the budget for everyone involved.”
Further information on the Government’s response to this aspect of the FITs consultation, together with a summary of the relevant consultation responses, is also being published today on the Department of Energy and Climate Change’s website.
The consultation closed on 23 December 2011 and over 2,000 consultation responses were received which we have been analysing carefully. We are intending to announce the outcome of the consultation by 9 February 2012, in time for any resulting legislative changes to come into effect from 1 April 2012. Our aim is that this announcement will be accompanied by a set of reform proposals for the next phase of the comprehensive review of the FITs scheme, which will be the subject of a further consultation.
Feed-in Tariffs (FITs) became available in Great Britain on 1st April 2010. And isn’t available in Northern Ireland - although this is under review.
Under this scheme energy suppliers have to (compulsory for big six suppliers) make regular payments to householders and communities who generate their own electricity from renewable or low carbon sources such as solar electricity panels(PV) or wind turbines.
About the Scheme
The FITs scheme guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to the bill savings made by using the electricity generated on-site.
Once you have a microgeneration technology installed you should experience a monthly reduction in your electricity bill and then receive an income from your Feed-in tariff provider. However, if you have taken out a loan to pay for the installation you will have to make monthly repayments to your loan company.
Feed-in tariffs are designed so that the average monthly income from your installation will be significantly greater than your monthly loan repayment (with a 25 year loan).
The scheme covers the following electricity-generating technologies, up to an installation size of 5 Mega Watts:
- Solar electricity (PV) (roof mounted or stand alone)
- Wind turbine (building mounted or free standing)
- Hydroelectricity
- Anaerobic digestion
- Micro combined heat and power (micro CHP) (limited to a pilot at this stage)
The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS* scheme. See below for further details
You will qualify for the full FIT payments if:
- The technology was installed between 15th July 2009 and 31st March 2010 and you transfered to FITs before 1st April; OR
- It is installed after 1st April 2010 using an MCS* certificated product and installer;
* The Microgeneration Certification Scheme (MCS) is an independent scheme that certificates microgeneration products under 50kW and installers in accordance with consistent standards. Any commercial or larger scale systems, over 50kW, and all anaerobic digestion installations must apply directly through the Renewables Obligation Order feed-in tariff process for larger installations (ROO-FIT) process as they are not covered by the MCS. Information on the ROO-FIT process is available on Ofgem’s website.
Government review of FITs
The Department of Energy and Climate Change (DECC) have announced they are bringing forward their review of Feed-in-Tariffs which will be completed by the end of 2011 (originally scheduled for 2012).
The comprehensive FITs review will:
- Assess all aspects of the scheme including tariff levels, administration and eligibility of technologies
- Be completed by the end of the 2011, with tariffs remaining unchanged until April 2012 (unless the review reveals a need for greater urgency)
- Fast track consideration of large scale solar projects (over 50kW) with a view to making any resulting changes to tariffs as soon as practical, subject to consultation and Parliamentary scrutiny as required by the Energy Act 2008.
Further information is available on the DECC website.
How the scheme works
If you are eligible to receive the FIT then you will benefit in 3 ways:
1. Generation tariff – a set rate paid by the energy supplier for each unit (or kWh) of electricity you generate. This rate will change each year for new entrants to the scheme (except for the first 2 years), but once you join you will continue on the same tariff for 20 years, or 25 years in the case of solar electricity (PV).
2. Export tariff - you will receive a further 3p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn’t used on site. The export rate is the same for all technologies.
3. Energy bill savings – you will be making savings on your electricity bills , because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.
Deemed export
Domestic FIT installations are likely to have their export deemed (estimated) at 50% in most cases until smart meters are rolled out.
Example of how the Feed-in Tariff works
As an example, a typical domestic solar electricity system, with an installation size of 2.7 kWp could earn around:
- £990 per year from the Generation Tariff
- £40 per year from the Export Tariff
- £140 per year reduction in current electricity bills.
This gives a total saving of around £1,170 per year.
This assumes 50% of the electricity generated is exported. The figure will vary depending on how much is exported.
You will require an additional electricity meter to measure the electricity that your system is generating (known as a total generation meter), and also to measure how much is being fed back into the electricity grid (if not deemed, this is known as an export meter or may be called a feed-in, feed-out meter).
You will be required to provide meter readings to the suppliers, usually every quarter, which is also the period that payments are typically paid from your supplier.
- Once your chosen installer has installed your generating technology, they will register you on the central FIT database and you will then receive a certificate confirming FIT compliance.
- You must then inform your chosen energy supplier that you are eligible to receive the FIT by providing the certificate.
- The supplier will then cross reference your installation with the central FIT database.
- Payments will then be made by your energy supplier at intervals to be decided between you and your supplier.
- You may be required to provide meter readings to the suppliers if requested.
A list of the energy suppliers who can provide FITs can be found on the OfGem website.
If you want to opt out of the guaranteed export tariff you must inform the supplier. You may want to do this if you chose to use a power purchase agreement. (This is a legal contract between you and your electricity provider.)
Tariff levels, for technologies installed between 15th July 2009 and 31st March 2012 of most significance to householders.
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*As of 1 April 2011 which take into account rise in Retail Price Index (RPI) which was 4.8%.
Tariff levels vary depending on the scale of the installation.
The tariff levels shown in the table above apply to installations completed from 15th July 2009 to 31st March 2012 for the lifetime of the tariff. After this date, the rates decrease each year for new entrants into the scheme.
All generation and export tariffs will be linked to the Retail Price Index (RPI) which ensures that each year they follow the rate of inflation.
For a full list of tariffs, please go to FITs table from Ofgem taking into account the Retail Price Index.
What payments will you be eligible for, and how can you claim them?
The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS scheme:
The following advice applies to domestic installations. If you have installed a qualifying electricity-generating system in a non-domestic property with a grant from the Low Carbon Buildings Programme, see the Low Carbon Buildings Programme website for further guidance.
Installed before July 15th 2009 and previously collected Renewables Obligation Certificate (ROCs) payments
- If you contacted Ofgem before 1st April 2010 to get your ROC transferred to the FIT then you will receive 9p/kWh for every unit generated plus 3p/kWh for every unit exported
Installed before July 15th 2009 but not registered for Renewables Obligation Certificates
- If you didn't contact Ofgem by 31st March 2010 to apply for Renewables Obligation accreditation then you won't be eligible for FITs.
- If you did register with Ofgem by 31st March 2010 then you will receive the flat tariff of 9p/kWh for every unit generated plus 3p/kWh for every unit exported.
Installed between 15th July 2009 and 1st April 2010
- You will get full FIT payment if your installation is MCS certified (installer and product). You can apply after April 1st 2010 if you haven’t already.
- If your installation wasn’t MCS certified and you didn’t contact Ofgem by 31st March 2010 to apply for Renewables Obligation accreditation then you won’t be eligible for FITs
Installed after 1st April 2010. MCS certificated product and installer
- You are eligible for full generation tariff and export tariff.
- Contact your energy supplier, and send them your MCS certificate to tell them you are eligible to receive FITs.
- If you install after the 2nd year of the scheme your tariff could be reduced, depending on the installation size.
Installed after 1st April 2010. Non-MCS certificated product and installer
- Systems that are not MCS certificated will not be eligible to receive the FIT generation tariff or the guaranteed FIT export tariff. There is the possibility of receiving generation and export tariffs outside of the FIT scheme if privately negotiated.
- You will still benefit from lower electricity bills. The saving will depend on how much of the electricity you generate is used on-site.
Small Generators (50kW to 5MW) installed from 15th July 2009
If you switched from Renewables Obligation Certificates (ROCs) to FITs before 1st April, then you will be eligible to receive the full generation tariff and export tariff.
