Feed In Tariffs

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The Energy Act 2008 provides broad enabling powers for the introduction of feed-in tariffs (FiT’s) for small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) capacity - 50 kilowatts (KW) in the case of fossil fuelled CHP

Feed In Tariffs

The FiT’s will be introduced through changes to electricity distribution and supply licences.
These provisions are intended to encourage the uptake of small-scale low-carbon energy technologies while the Renewables Obligation (RO) continues to be the main support mechanism for large scale renewables deployment. Greater deployment of small-scale low-carbon technologies will -:
  • Engage communities, businesses and domestic households in the fight against climate change;
  • Reduce reliance on centrally generated electricity;
  • Increase security of supply; and
  • Reduce losses through transmission and distribution networks.

 

Small-scale low-carbon electricity technologies include:

 

  • Wind;
  • Solar Photovoltaic (PV);
  • Hydro;
  • Anaerobic digestion;
  • Biomass and biomass combined heat and power (CHP); and
  • Non-renewable micro-CHP.

 

 

Eligible Technologies and Proposed Tariff Levels:

Below is a table listing the eligible technologies for the FiT and the tariff which is applicable to them

Technology Scale

2010-11 Tariff p/kWh

 Annual Change 
Solar PV (New Build) <4kW 36.1 -7%
Solar PV (Retrofit) <4kW   41.3 -7%
Solar PV 4-10kW 36.1 -7%
Solar PV 10-100kW 31.4 -7%
Solar PV 100kW-5MW 29.3 -7%

The general belief is that solar PV is going to be the most popular technology within the residential and commercial construction sector. Regarding the differing tariffs for different PV installations:

 

  • 'New build' will apply to systems integrated into new buildings.
  • 'Retrofit' will apply to systems mounted to existing buildings.
  • 'Stand alone' relates to systems that are installed primarily to feed power into the grid, without much of the energy being used on-site.

 

The Government has proposed the above fixed payment from the electricity supplier for every kilowatt hour (kWh) generated for a period of 20 years, excluding PV which will be eligible for 25 years. In addition, there would be a guaranteed minimum payment additional to the generation tariff of 3p for every kWh exported back to the grid. Generators receiving FiT’s will also benefit from on-site use; where they use the electricity they generate on-site they will be able to offset this against electricity they would otherwise have had to buy from their energy supplier, which would cost approximately 13p per kWh.

Installations prior to the 15th July 2009 which received Low Carbon Buildings Programme funding will move automatically to the FiT and will receive a generation tariff set at an approximately equivalent level to the value of their previous ROC band i.e. not the full tariff. Any generating stations eligible for FiT’s where installation is completed after the 15th July 2009 and before the start of the FiT’s scheme will be able to benefit from FiT’s as if the installation had been completed on the start-up date of the scheme.

There is an annual rate of change of -7% proposed with the FiT for solar PV, this means that if you were to install a retrofit PV system on your property towards the end of 2011, you would receive a generation rate of 38.4p (41.3p -7%). This will continue to drop by 7% per year until 2035 under the current proposals by the UK government.

The UK Government is committed to having FiT’s in place in April 2010 and will remain in place until 2020

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Feed in Tariffs aim to incentivise residential customers and commercial businesses to install eligible renewable technologies. The scheme guarantees a set fee payable for the electricity generated and an additional rate for electricity exported back to the grid for a set period of time, which is linked to the type of technology employed.

There is a belief that the increased certainty that this scheme will provide will encourage individual households, communities, businesses, schools, hospitals, universities and a host of other organisations to consider installing small-scale low carbon electricity generation technologies on their buildings.

The Renewable Electricity Financial Incentives Consultation, launched on 15th July 2009, sets out how the FiT’s scheme is intended to work, including the proposed tariff levels. These proposals have been developed with input from UK stakeholders - energy industry trade associations, energy suppliers, Ofgem and NGOs - and the consultation constitutes a more formal opportunity for all interested parties to have their say on the details of the FiTs mechanism.