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Feed in Tariffs a great boost for sustainable living but don't believe the figures
The UK’s Feed In Tariffs (FITs) for small scale generation of renewable power were introduced by the last government and came into force on April 1st 2010. Basically, anyone who installs (using a certified company) renewable technology up to 5 Mega Watts (MW) will be paid a set amount for the power they generate, regardless of whether they use it for their own use or not. Any they don’t use will be exported to the grid and this amount will attract an additional payment. The renewable sources acceptable to the scheme are solar photovoltaic (PV), wind turbines, hydroelectricity, anaerobic digestion and combined heat and power (CHP). Each attracts a different payment level and life-span. The payment rates and the life-span of payments are:
So, you find an MCS (microgeneration certification scheme) certified installer, he fits the MCS certified equipment and then you start to get your payments. There are three areas of payment, Firstly, the figure in the chart. This is paid for every kilo watt hour (kWh) you produce. This is the nice bit with feed in tariffs, you can use all that power for your own use and you still get paid that figure. The thinking behind this is that you are not drawing fossil fuel derived grid power but are being rewarded for generating your own green power. The second part is also pretty good. If you don’t use it yourself, then you get an additional 3p for every kWh you export to the grid. I personally feel the balance of these two rates is wrong as there is very little incentive not to just waste the power in your own home - not very environmentally friendly! The third part of the equation is the power you buy from the grid when the wind isn’t blowing or the sun ain’t shining. Although this is at a standard rate, you will use far less as you will be using you own power whenever available.
This all sounds very good and the idea is to make us jump at this opportunity but you really do have to look at the costs. Remember this is easy money for the MCS approved companies and the figures they give are likely to be more than little bit weighted to get you to sign up. To show what I mean, here is an example I found on the web for a retrofitted 2kW photovoltaic system.
Total cost of 2kW system with installation = £6,000
Energy generation estimate per year = 1700 kWh
Basic Feed-In Tariff benefit per year = 41.3p x 1700 = £707.20 per year
Saving from using 50% of the energy generated = 12p x 850 = £102.00 per year
Export 50% of generated energy to the grid = 3p x 850 = £25.50 per year
Total Income per year (guaranteed) = £834.70
Therefore, the system payback time will be around 7 years (not taking into tariff and energy cost rises) meaning that the owner will benefit from 18 years of income at approx. £850.00 per year = £15,300 total.
This sounds like a no-brainer but we have to scratch a little deeper. In reality, the price for 2kW installed is more likely to cost £10,000 rather than the £6,000 in this example. My electricity tariff is 9p per kW rather than 12p and the average per kW in the UK for south facing un-shaded sites is more like 780kW. This makes our electricity generated now only 1560kw. So let’s run the figures again:
Total cost of 2kW system with installation = £10,000
Energy generation estimate per year = 1560 kWh
Basic Feed-In Tariff benefit per year = 41.3p x 1560 = £644.28 per year
Saving from using 50% of the energy generated = 9p x 780 = £70.20 per year
Export 50% of generated energy to the grid = 3p x 780 = £23.40 per year
Total Income per year (guaranteed) = £737.88
The payback now is 13.5 years rather than 7 years and that doesn’t allow for any maintenance or servicing costs. On the face of it the sums still add up. After all, once paid back you are going to get this payment, index linked for a further 11.5 years so it still isn’t a bad deal is it? Don’t forget the compound interest that you will be losing on the £10,000 you have spent. If the £8,500 (based on 2.5%) you would have gained over the 25 years is set against the £18447 you receive over that period then the payback almost matches the 25 year term.
There is another aspect to this. You have produced your own green energy and reduced your carbon footprint. Sustainable living is something we must all work towards and I am very much in favour of feed in tariffs to get things moving. It is my intention to fit both solar and wind power as we have a good location but I am doing it because I believe we must get away from fossil fuels. Having a system that will pay me to do it over the life of the equipment is good but take a large pinch of salt with the figures that the salesman supplies!
If you want to know more detail about the Feed in Tariff system then a great site is