The Feed-in Tariff in the UK Explained

In April 2010 the government introduced the Feed-in Tariff as a means of incentivising homeowners to invest in solar panels. This was part of the scheme to reduce carbon emissions in the UK. Encouraging UK homeowners to invest in solar panels will result in them using clean green electricity which is produced by their panels rather than electricity from burnt fossil fuels.

Inspired by other successful Feed-in Tariffs such as Germany, Spain, Portugal and Greece, the introduction has resulted in a significant increase in the number of domestic solar panel installations.

The Feed-in Tariff (FIT) works as a financial incentive, as it pays homeowners for each unit of electricity that their solar panels produce. The generous payments are tax-free and are guaranteed for 25 years. They will also rise in line with inflation. The Tariff pays in two different ways. The first way is the Generation Tariff, which means that you will receive 43.3 pence for each unit or kWh that your panels generate, regardless of whether you use it in your home or not.

Because you will not be able to use all of the electricity that your solar panels generate, there is also an Export Tariff which pays 3.1 pence per kWh that you do not use in your home and instead export into the National Grid for others to use.

Contrary to popular belief the Feed-in Tariff is not paid by the government. Though the tariff was introduced by the government and is supported and regulated by the government, it is actually paid by you.

It was decided that energy companies should be the ones to pay homeowners for the electricity that their panels produce. They do this by charging all of their customers a few pence (approximately 3 pence) extra per year on their bills. You will be paid by your energy supplier for the electricity that your panels generate. These payments are often made quarterly.

The Feed-in Tariff makes solar a great investment as it can provide an average of 11% rate of return. Though the average domestic solar panel array will cost £11,000 to design and install the FIT payments mean that it will usually pay for itself in about ten years. The tariff, which is guaranteed to pay for 25 years, means that after the system has paid for itself, any further income from the FIT is the return on the investment.

Compounded with the savings on electricity bills from using the free electricity that is generated from the panel array, the Feed-in Tariff makes investing in solar panels a more financially appealing alternative.

Homeowners who do not have the money to invest in solar can also benefit because of the Feed-in Tariff. Solar companies have launched free solar programmes where they install a free solar panel system on a homeowner's roof, funded by the tariff. The homeowners benefit from the free solar panels by receiving lower electricity bills. The solar companies receive the payments from the Feed-in Tariff and these cover the design, installation and maintenance costs.

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EvoEnergy are the UK's largest specialist solar pv installer offering turnkey solutions for both homewoners and commercial property owners. http://www.evoenergy.co.uk/domestic-pv/

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