Free Government Money for 20 Years

The solar feed-in-tariff (FIT) is still running, and giving a guaranteed 20 years of income.

Many customers wonder about the details, so in this blog I detail how it works, the difference between generation and export, and when it stops again.

Business woman under a money rain - isolated over a white backgroundFree Government Money?

 

So What is the FIT?

The FIT is a government backed, index linked payment given to you as an incentive for installing solar panels. The important things to note are:

 

The generation tariff

For every kWh you generate, you are paid a sum of money. Currently this is 3.86 p/kWh.

A typical example system in SE of England could be a 3.85 kW solar system, generating 3,408 kWh/year (on average). This would therefore pay you a generation tariff of:

3,408 * 3.86p = £131.55 per year

... but that's not all.

 

The Export Tariff

As well as the generation tariff, you receive a "Deemed Export Tariff" payment. This is currently 5.24 p/kWh for half of all the energy you generate. In other words they deem that half of what you generate is exported.

So for the example above, your export Tariff is:

3,408 * 5.24p / 2 = £89.29 per year

The great thing here is that it is deemed to be exported even if you use it all. So you get paid the export incentive whatever your system. This is great news if you have batteries to store your surplus electricity.

 

So What Would I earn in 20 Years?

The FIT currently runs for 20 years. It is also index linked to RPI, so as prices rise so will the FIT. In the example above, if we choose an RPI of 2% per year, that gives us a grand total of FIT payments of:

£5,365.83 over 20 years with 2% per year increases

This number would vary in practice as the actual annual solar generation depends on the weather variation in that location.

However, the deadline to join the FIT is looming. After the end of March 2019, the government is withdrawing the FIT, so it is important to get your system installed AND commissioned AND registered with the FIT scheme before that deadline.

 

So is that the end of Solar?

Not at all. The FIT is a very nice incentive, and we are sorry to see it stopping so abruptly. However, the biggest value for the consumer of solar is that they don't have to buy expensive electricity from the grid, when they can use their self-generated electricity.

For the example above, if we compare to a typical unit price of 15 p/kWh, the value of the solar electricity generated  is:

3,408 * 15p = £511.20

With solar panel prices continuing to fall over time, and the pressing need to reduce our carbon footprint, the demand for solar will only grow. Be sure to click this button if you would like to have a peronalised quote for your property.

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Further Information

This blog focuses on smaller domestic installations. The entirety of the FIT rates are documented by OFGEM here

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