What is the feed in tariff
The feed in tariff was Introduced by the Government in April 2010 to encourage the expansion of renewable energy generation in the UK. Basically if you have a solar PV system installed by an MCS accredited installer, connected to the electricity grid and once registered you will receive a payment for every single unit of electricity your system generates. Even if you use all of the electricity you generate in your home you still get the feed in tariff for everything you generate. You also get a small payment of 4.77p per kWh for anything you export ( on most domestic installations there is no export meter fitted so the scheme assumes you export 50% of everything you generate)
Yes thats everything your system generates you will get a payment for. The current 2014 rate is around 14.38p per kWh of electricity on a domestic system. The rate you get is guaranteed for 20 years and does increase with inflation.
But hasn’t the Subsidy ended
This is a very common perception, and we’re constantly hearing people say they thought the subsidy had finished. The answer is of course no, if you install a solar PV system now you are guaranteed payments under the feed in tariff for the next 20 years.
It is true that the feed in tariff for new installations is reviewed every year, and the tariff has reduced from 40p per kWh when the feed in tariff started back in 2010. This is only fair as the cost and the performance of current PV systems has changed dramatically The costs of a system are much lower and the performance higher. Overall the rate of return around 10% has stayed constant with the reductions in the fit rates and the costs of a system.
A guaranteed income for the next 20 years
Yes thats true, once your system is registered you will continue to get payments under the feed in tariff in that time, with the rates adjusted for inflation. You also get the benefit of savings on the cost buying in any electricity that you generate and use in your home. The cost of which can only go up and up, making your savings higher and higher as time goes on. After the 20 year period has passed you will no longer get the feed in tariff payments but you will still continue to make savings on the electricity you use.