Feed-in-Tariff scheme (FITs)
As part of its commitment to the EU to source 15% of its energy from renewable sources by 2020, the UK Government introduced FITs effective from 1st April 2010
FITs are a per-unit support payment specifically targeted at small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) capacity
The FiT scheme has been subject of a number of reviews and changes particularly affecting solar PV and will continue to be reviewed. Phase 2a & 2b of the comprehensive review will result in further changes effective from 1st July 2012 for solar PV and effective from 1st October 2012 for wind
Key features of FITs:
- A guaranteed payment from your electricity supplier for every kWh (unit) generated (the ‘generation tariff’)
- The FIT participation is for a period of 20 years for wind and 25 years for solar PV (possibly reducing to 20 years from 1st July 2012)– ie a generator will receive the FIT for a guaranteed 20/25 years
- Generators will be able to off-set against power they would otherwise have had to buy
- In addition to the generation tariff a generator will receive a guaranteed minimum payment for every unit exported (the ‘export tariff’). The minimum payment is set at 3p/unit (RPI linked – 2011: 3.1p/unit; 2012:3.2p/unit)
- The electricity qualifying for export tariff can either be measured by means of an export meter or most large electricity suppliers offer a 50/50 scheme where it is assumed that 50% of all electricity generated will be exported to the grid
- Initially the tariff was to be reduced at predetermined rates known as ‘degression’ but it is clear the Government consider regular reviews key to the FiTs to accommodate changing circumstances. The payments and level of degression set at the start of the scheme have therefore already been subject to change. The level of payment will remain at the figure applicable when the installation was commissioned. The reducing level of payment is intended to reflect the reducing cost of the capital investment and the expectation of a certain rate of return
- Generation & export tariffs are linked to RPI (adjusted on 1st April each year)
PAYMENT LEVELS SET OUT IN THE TABLE BELOW HAVE BEEN SIMPLIFIED & MAY BE ADJUSTED FOLLOWING REVIEWS TO THE FiTs & RPI ADJUSTMENT
| Technology & scale | Tariff level for new installations in period (p/kWh) | |||||
|---|---|---|---|---|---|---|
| 01/04/10 –31/03/11 | 01/04/11 -31/03/12 | RPI adjusted | 01/04/12 -30/09/12 | 01/10/12 -31/03/13 | 01/04/14 -31/03/15 | |
| Wind – >1.5 – 15kW | 26.7 | 26.7 | 29.3 | 28.0 | 21.0 | 21.0 |
| Wind – >15 – 100kW | 24.1 | 24.1 | 26.5 | 25.4 | 21.0 | 21.0 |
| Solar PV | 01/04/10 -31/03/11 | 01/04/11 – 03/03/12 | RPI adjusted | 04/03/12 -30/06/12 | 01/07/13 -31/03/14 | 01/04/14 – 31/03/15 |
| PV – <4kW (new build) | 36.1 | 36.1 | 39.6 | 21.0 | 21.0 | TBD |
| PV – <4kW (retrofit) | 41.3 | 41.3 | 45.4 | 21.0 | 21.0 | TBD |
| PV – >4 -10kW | 36.1 | 36.1 | 39.6 | 16.8 | 16.8 | TBD |
| PV – >10 -100kW | 31.4 | 31.4 | 34.5 | 15.2 | 15.2 | TBD |
- The payments are made by the generator’s chosen FiT supplier which is generally the electricity supplier but does not have to be
- Technologies must be certified under the Microgeneration Certification Scheme (MCS) and must be installed by an MCS certified installer
- Multi installation sites (ie more than one turbine) will be eligible but the capacity of the site will determine the banding for the FIT
- Income tax – Exemption for domestic installations where export not excessive
- Generators may assign FITs to a third party
