The news and energy industry have been reporting headlines on changes to the Feed In Tariffs and have been stirring up debates about how and when they should be applied. But not many people actually understand what a Feed In Tariff is and how the Feed In Tariff scheme works.
The scheme is known by two names: the Clean Energy Cashback Scheme and the Feed In Tariff Scheme. Basically it is a scheme to compensate people for the extra energy they produce using a clean energy source such as wind power or solar power.
In order to be part of the scheme using the rates in this article the household needs to be assessed and given an Energy Performance Certification rating of D or better. If you do not meet this rating or your clean energy output is greater than 4KW then there are different rates applied and the calculations in this article may have different payoffs.
The current payout for a Feed In Tariff scheme which was entered into before 31st January 2013 is 15.44p per KW providing you meet the criteria previous noted. Many people ask whether or not the Feed In Tariff schemes are useful. The example often cited is that the Netherlands produces 40% of the country’s electricity through Feed In Tariff schemes. The UK is still a long way behind this and according to the Department of Energy and Climate Change (DECC) the UK only generates about 9.4% of its electricity usage from clean energy sources. The Feed In Tariff scheme payouts are therefore aimed at increasing this figure.
In order to get accepted to the Feed In Tariff scheme you first must install a clean energy source such as solar panels or wind turbines. These technologies will help generate renewable energy from your household.
The clean energy generated is first consumed by your household to [reduce your energy bills] and then for every extra unit of energy you produce you will be paid by your energy supplier . This extra energy is supplied back into the energy grid so that other households can use it.
The amount of money you get paid for the clean energy you have put back into the grid will vary depending on the scheme you are in and the energy source you are using to produce the renewable energy.
It’s important to note that the Feed In Tariffs are index linked and will track the market prices of electricity and technology that is installed in your home. The tariffs are guaranteed for up to twenty years.
It is possible to generate income using the Feed In Tariff scheme as it currently stands in the UK. It will also dramatically cut your electricity bill. An example would be that if you installed a 3KW system with 12 solar panels you are likely to generate approximately 2575KWhs of clean energy over a year. After the household usage is taken into account and a Feed In Tariff rate of 15.44p for every unit of clean energy (capped at £397) plus 4.5p for every unit sold back into the national energy grid (£57) which gives the total Feed In Tariff income of up to £455.
If you take into consideration that this income will continue at this rate for around 20 years, which is the average lifespan of the panels, there is the possibility to generate an extra £12,819 for the household. The above calculation is based on generating 2575 KWhs per year which may not be true of every clean energy installation.
There are four main sources of renewable energy used in the UK. These include:
The Feed In Tariff scheme is available to all installations of clean energy. Generally, most people who have this technology are already part of the scheme but if you are not part of the scheme then you can sign up.
The rate you get from the scheme may be higher or lower depending on when you had the clean energy technology installed and what is installed.
Renewable heat generation is not included in the Feed In Tariff scheme. There may be some incentives and the Department of Energy and Climate Change has made some announcements which may cover these areas. An example of a renewable heat source is a ground heat pump.
In general the answer is that you can switch your energy supplier without changing your Feed In Tariff provider. You should talk to your energy supplier about it first before proceeding with this as there may be terms and conditions about changing the arrangement.