Before you can make a decision on joining the feed-in tariff scheme, you'll need to assess the costs and rewards of doing so.
The Cost of Installation
Renewable energy technologies can vary wildly in their size and scope so naming a definite cost is impossible. To give you a rough idea of the sort of figures needed, you can get a rough idea based on the following assumptions:
- a 4 kWp (kilowatt peak) Solar PV panel costs around £5,000 - £8,000
- a 1kW turbine costs around £2,000
- 6 kW free-standing wind turbine; £21,000 - £30,000
- 5 kW Hydroelectricity system - £25,000
- Micro combined heat and power (micro CHP) from £5,500
Naturally you can expect a larger, more expensive installation to yield more of a return due to it having more potential to generate energy. Before investing anything you should review the efficiency of your home, and ensure that it has an Energy Performance Certificate (EPC) rating of at least 'D', in order to qualify for the highest rate of feed-in tariff.
Rates and Earnings
Aside from saving energy on your own bill from generating a portion of your own energy, you can also get paid for your efforts. Any spare electricity that is exported from your property back to the supplier is credited at a flat unit rate of 4.85p kWh, regardless of the installation type. If you don't have a two-way meter capable of reading this, it is assumed that 50% of your total generated energy is exported, and you are credited accordingly.
You also get paid for the total amount of energy you generate, the rates for this vary depending on your installation type and energy performance certificate.
Generation rates for solar PV panels
Tariff rate (01/07/15 - 30/09/15)
Tariff Rate (01/10/15 - 31/12/15)
Tariff rate if EPC rating less than 'D' (01/07/15 - 31/12/15)
Up to 4kW
4kW - 10kW
Payments for solar PV are guaranteed for a certain number of years, this will be 20 or 25 years, depending on when you joined the scheme. The unit prices awarded are tax-free and will rise in-line with inflation.
Other renewable technologies generation rates
Tariff Rate (10/10/15 - 31/03/15)
Tariff Rate (01/04/15 - 31/03/16)
Wind Turbine (up to 1.5kW)
Wind Turbine (1.5kW - 15kW)
Hydroelectricity (up to 15kW)
Micro Combined Heat & Power (up to 2kW, first 30,000 units)
All of the above have payments guaranteed for 20 years with the exception of Micro CHP which is only for 10 years.
To give you a rough idea of how all of this can add up, let's take a quick look at an example. An average house with an ideally placed 4kWp solar PV panel, and an EPC rating of D or greater could save/earn the following:
- Income from generation tariff = £400
- Income from export tariff = £80 (based on 50% export rate)
- Additional savings on own fuel bills = £120
- Total of £600 per year
Taking into consideration the installation cost of £6,500 for the above example, it would take around 10 years to 'payback' the investment from the savings. This may sound like a long time, but you should bear in mind that you're guaranteed payments for at least 20 years, meaning that any payments you get over the following years are pure profit.