What is the Feed in Tariff Scheme?
The Feed in Tariff Scheme is a government backed initiative to persuade individuals to create their own “green” energy. As part of the scheme payments will be made to any person who owns a renewable electricity setup. The Feed in Tariff Scheme was introduced at the start of April 2010 in Great Britain. At the current time it is inapplicable to people in Northern Ireland, although this is being reconsidered.
Home owners and businesses that produce their own electricity through a renewable energy system are eligible to become member of the Feed in Tariff Scheme. The main aim of this initiative is to help arrive at the UK goal; that 15% of our electricity will come from renewable sources by 2020.
How will this initiative work in practice?
It is compulsory for the dominant electricity providers in the United Kingdom to make scheduled payments to individuals who produce their own power using renewable energy. However, many other providers have agreed to be part of the Feed in Tariff Scheme willingly. The Feed in Tariff scheme and payments work in 3 ways:
1. Generation tariff; for each kilowatt hour (kWh) of electricity you create and use in your own property the electricity provider will give you a fixed monetary rate per unit. This rate stays stationary for the entire length of the scheme (20-25 years). New participants into the Feed in Tariff scheme may discover that their steady rate is less than current scheme participants, to get the greatest amount out of your earnings the earlier you agree to participate the more earnings you will gain.
2. Next is the export tariff; any additional electricity that you generate above the units you use can be sold back to the electricity grid for a standard rate per kWh.
3. When there is not enough wind or sun to create the power you need for your household or company you can still buy electricity from your normal supplier. Even though the cost of this power matches the amount you will have paid previously the complete consumption is far less meaning a lower bill each month.
How much will you get paid?
The type of renewable energy system you own affects the amount that you will be paid through the Feed in Tariff scheme. Solar power has a greater kilowatt hour generation tariff on average than hydro power or wind farm generated energy. Up till the 31st of March 2012 the most you could possibly earn is 43.3p for each kilowatt hour of power used.
The fixed export tariff for the year April 2011 – March 2012 is 3.1p per kilowatt hour of energy that is sold back to the grid. The power suppliers that pay you the export tariff don’t use money from their pockets; they factor the cost of the Feed in Tariff Scheme into their electricity prices. Consequently individuals that do not use renewable electricity are funding those that do.
Benefits of the Feed in Tariff Scheme
Installation costs can be high but these tariff payments shouldn’t only cover the initial costs but also yield a return of up to 8% yearly. They are designed so your average monthly income from the Feed in Tariff Scheme will override any loan repayments over a 25 year period.
When you begin generating your own power you’ll see massive savings on your utility bills as you will only pay for consumption above the amount you can produce yourself.
Solar energy is a long term venture and won’t grant you a significant return straight away. As time passes your small savings will add up making renewable energy an extremely profitable asset.
When you’re generating your own power it seems sensible to ensure that nothing is being wasted. Attic and wall wadding, alongside low energy light bulbs and energy saving recommended appliances can help minimise how much electricity is wasted ensuring you retain extra money.
There are plenty of benefits of renewable energy for example, saving on your utility bill and protecting the environment. The power of the sun is one of the most lucrative sources of renewable electricity and can generate energy even on days when the weather isn’t particularly sunny as photovoltaic solar panels do not need direct sunlight.