The feed in tariff (FIT) system is designed as an incentive for energy producers to move away from conventional fossil fuels to renewable energy sources. Essentially, it is government legislation which guarantees a fixed, premium rate for renewable electricity fed into the national grid. The power companies are obliged by the government legislation to buy the renewable electricity.
Feed-in tariff legislation fixes an above market rate for utility companies to buy electricity from renewable energy producers. The fixed tariff guarantees a return over a long period making renewable energy an attractive prospect for investors.
The tariffs apply to Wind, Solar PV, Hydro and Anaerobic Digestion microgeneration systems. They are in addition to the tariff that your supplier pays for exported electricity. Savings will also be made by using your electricity for your own use and of course reducing the amount you need to purchase.
Source |
Size |
Tariff per kWh* |
Tariff + export tariff of 3.1p/kWh* |
Tariff + avoided elec price of 13p/kWh* |
PV |
<4kW |
43.3p |
46.4p |
56.3p |
PV |
4-10kW |
37.8p |
40.9p |
50.8p |
PV |
10-50kw |
32.9p |
36.0p |
45.9p |
Wind |
<1.5kW |
36.2p |
39.3p |
49.2p |
Wind |
1.5-15kW |
28p |
31.1p |
41p |
Wind |
15-50kW |
25.3p |
28.4p |
38.3p |
Hydro |
<15kW |
20.9p |
24p |
33.9p |
Hydro |
15-100kW |
18.7p |
21.8p |
31.7p |
On this basis if a 16 panel PV system is installed on a south facing roof you would expect to generate 3,296 kWhs. For this you would receive 43.3p per kWh(unit) or £1,427. If you were to use half of this you would save £214 and also get a further £52 for exporting back to the grid at 3.1p per unit. This gives a typical return of 12% on the investment or an 8 year payback. The Feed in Tariff is guaranteed for 25 years and is linked to RPI.
The Feed-in tariff system has already been in place in many states such as Germany, Israel, the US, Spain and Australia for some time now and has been instrumental in the success and growth of renewable energy operations.