In April 2010 the government introduced the ‘Feed in Tariff’ to incentivise individuals, businesses and other organisations to generate their own electricity by installing low carbon technologies.
In simple terms, this means that if you chose to install a retrofit Solar PV system to your property (up to 4kWp), you will receive a payment of £0.21 per kilowatt produced from your solar panels. This payment is tax free for domestic properties, and guaranteed for 25 years if installation is completed before March 2012.
In addition to the ‘Feed in Tariff’ payment for generating your own electricity, you will also receive an export payment at a rate of £0.03 per kilowatt hour. This is based on the assumption that 50% of the electricity your solar panels generate will be exported to the National Grid. This is calculated using your generation meter which measures the kilowatt hours of energy produced during daylight hours.
How do I receive the payments?
In order to claim the payments, a quarterly meter reading is required for your electricity supplier, who will make payment directly into a bank account nominated by you. This could be your current account, a savings account or even trust fund for a child. You will also receive a quarterly statement to keep you up to date.
In addition to being paid for the electricity generated from solar panels, there is usually a considerable decrease in the electricity bill for the property. During daylight hours, the electricity you generate from your Solar PV system will reduce, or eliminate the need to use electricity from the National Grid, so in effect you only pay for the electricity you use at night. Recent reports have shown that electricity bills have more than halved since the installation of Solar PV.
Current trends indicate regular increasing of energy costs over the coming years, (in fact the latest OFGEM estimates believe that 8.1% per annum is a realistic figure) which makes the tax free ‘Feed In Tariff’ and export payments from Solar PV one of the best investments available.