As of 12th December 2011 the Feed In Tariff rates are proposed to be reduced significantly. The government proposal is for the rate for up to 4kWp installtions (standard domestic systems) to be reduced to 21p per kWh. It is our understanding that while this rate is still technically under consulation, it is virtually certain that this is the final rate that will be applied once the consulation ends.
The Feed In Tariff (FIT) is a government backed scheme that is designed to guarantee good long term financial returns for home owners with suitable roofs who choose to invest some of their savings in a Solar PV installation on their house.
How it works
- FIT Payments. The Feed In Tariff guarantees a payment of 21p per kWh* for every unit of electricity generated by your solar PV system for 25 years after its installation, even if you're using some of that electricity yourself in the house.
- Export Payments. On top of this you're guaranteed at least 3.1p per kWh for every kWh of electricity that is exported to the national grid for other people to use. For most systems the electricity companies simply estimate this figure as being 50% of the total generated
- Offset Electricity. PV generated electricity is also available to be used by you in your house as it's being generated, meaning that you don't need to buy this electricity from the electricity companies. This is known as offset electricity costs, and is worth around 13p per kWh that's used.
- Tax Free. Income from the Feed In Tariff is paid via your electricity bill, and unlike bank interest payments, does not count as taxable income. For higher rate tax payers this effectively means that an investment in PV can generate 40% more money in your pocket than a standard taxable investment with the same rates of return.
- Inflation Linked. Feed In Tariff and Export payments are index linked to inflation.