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Last updated: 13 March 2018

How You Can You Save Money with Solar PV : the Feed-In Tariff

What Is the Feed-in Tariff?

It was introduced in 2010 by the UK government in order to encourage the uptake of renewable energy sources. The Feed-in Tariff (FiT) payments are guaranteed by the government for a period of 20 years. The payments which you receive are tax free and indexed, which means that they will increase in accordance with the inflation. Payments remain tax free as long as you continue to reside in the property, instead of renting it out.

Having a Solar PV System Has three Important Benefits:

1. Getting Paid for the Electricity You Generate

The generation tariff is paid by kW by your electricity provider. The rate is determined by the government and if you install a solar PV system before 1st January 2015, you will receive 14.38p for every unit of electricity your solar system generates.

2. Getting Paid for the Electricity You Don’t Use

Another advantage of the fee-in tariff is the export tariff. If you do not use all of the energy you generate, the rest is exported back to the grid. For every unit that you export, you received 4.77p extra.

3. Reducing Your Energy Bill

Since you will be using the electricity that you generate, you will be cutting down on the energy you use from the grid. You can further increase the savings if you start using your washing machine, dish washer and other appliances during the day, when they will use the electricity that your solar system has produced.

How Much Can I Save?

If you have a 4kW solar system installed on a south facing roof, it can generate up to 3500 kWh electricity. You will received 14.38p for every kWh your system generates, which means that you will make £503 per year. At the moment electricity providers presume that the households uses half of the energy generated. The other half is exported back to the grid and you get paid 4.77p extra, so you get another £84. Moreover, you will be saving money from the electricity bill. If we assume that you use half of the energy you generate, that will lead to savings of around £250. The total benefit for your household will be £837 for one year.

Of course, savings will vary in different households depending on the usage of electricity, the size of the solar system, orientation of the roof and many other factors. If you want to find out how much you could be saving, use the calculator on the energy saving trust website.

Am I Eligible for the Feed-In Tariff?

In order to qualify for FiT and receive payments you need meet some simple requirements. Your installer has to be accredited by the Microgeneration Certification Scheme (MCS), and the solar panels have to be MCS approved as well. Your system size must be under 4kW in order to receive the maximum tariff, but this shouldn’t be an issue since most domestic solar systems are under the limit. You also have to make sure that your energy suppliers offers FiT payments.

From 1st of April 2012 you are also required to acquire an energy performance certificate (EPC). The EPC shows how energy efficient your home is. You need a grade of D or above to receive the full payment from the FiT. If the grade of your home is lower than D, you need to make some improvements in order to receive the standard rate payments of 14.38p per kWh. If you don’t make the necessary improvements required to get a D grade, you will still receive payments, but at lower rate of 6.38p per kWh.

How to Register for Feed-In Tariff

Firstly, you should ask your installer to register you in the MCS database and then send you a certificate. Secondly, you need to inform your electricity supplier that you wish to sign for the FiT and send them a filled application form, your MSC certificate and EPC certificate showing that your home is D grade or above.

The electricity supplier will then cross check the information you have sent. Afterwards, they will inform you when you have to provide meter readings and when the first payments will be made.

Read more: 5 Advantages and 5 Disadvantages of Solar Energy