how the Feed in Tariff works

The Feed-in-Tariff scheme was introduced by the Department for Energy & Climate Change in April 2010. The scheme was designed to incentivise the installation of microgeneration technologies – ranging from domestic installation, all the way through to utility scale solar farm installations such as our own planned 3.3MW farm.

The Feed-in-Tariff scheme provides a payment for each kilowatt-hour (kWh – a unit of electricity) that your installed technology generates. The amount that you get per kWh depends on the technology installed, and the size of the installation. For a domestic solar PV installation (of 4kWp or below), you would receive 41.3p per kWh generated. This payment is just for generating the electricity, whether you use the electricity in your house or not doesn’t affect your generation payment. This generation tariff is payable to you for 25 years, is tax free, and also linked to the retail price index (RPI) – therefore as an investment, its value will never decrease.

If you have an electrical load within the property whilst the solar PV is generating electricity (during the day) , for each kWh you use from your solar PV, you would be a making a saving in your bill. The amount that you will save is dependent on how much you pay for your electricity, and how much electricity you currently use during the daytime. You can do things to save more money, such as use your washing machine, dishwasher, or any other appliance during the day – so you get an amount of that electricity for free as opposed to importing from the grid.

In addition to the generation tariff, and the savings that you make in your bill, there is also a payment for export as well. In instance where you are generating more electricity with your solar PV than what you need, you will be exporting electricity to the grid. Payment for export can either be what is called deemed export – where it is assumed that you will export 50% of what you generate, and you are paid 3p/kWh; or you could choose to have an export meter fitted and sell your excess electricity on the open market.

Click here to watch an animation on how solar PV and the Feed in Tariff work.