Understanding Feed-inTariffs

Key terms:

Feed-in-Tariff (FiT) = The FiT (also known as the Clean Energy Cash Back) is a collective term which covers everything related to the electricity your PV system generates and how much you get paid for it. Under the FiT there are two tariffs; the Generation Tariff and Export Tariff

Generation Tariff = This is a set tariff through which your electricity supplier pays you a fixed amount for every unit of electricity your PV system generates for 25 years, whether you use this electricity or export it to the national grid

Export Tariff = This is the amount you earn in addition to the Generation Tariff for any electricity you don’t use and export back to the national grid, through your electricity supplier

Avoided Costs = These are the savings you make on your electricity bill by not having to import electricity from the national grid, and by generating your own electricity ‘on-site’

Imported Electricity = This is the amount of electricity you import direct from your electricity supplier
 

The Generation Tariff is not fixed – it drops every year after April 2012!

The Generation Tariff is set at 41.3p/kWh. By installing a solar electricity system now (and before April 2012) you are guaranteed to be paid this rate for the lifetime of your system (set at 25 years). Plus the Government has ensured the Generation Tariff will track inflation, ensuring you get paid a fair price year on year.

But… the Generation Tariff will drop by 8.5% every year after April 2012. And the rate you come in at is the rate you pay for the lifetime of your system.

The below diagram shows a property fitted with a Tesco Solar Electricity system. This property has been able to reduce its imported electricity consumption and avoided costs by using a 2.1kWp solar system to generate electricity on site, and export electricity to the national grid

• This house uses a total of 3300 kWh of electricity per annum
• The house generates 1785 kWh of electricity per year from the solar electricity system (Generation Tariff)
• The occupants use 892.5 kWh of the electricity they generate (Avoided Costs) and export 892.5 kWh to the grid (Export Tariff) - because it is generated at times when the house does not use it
• The house uses 3300 kWh of electricity so needs to import 2407.5 kWh of electricity from the grid to meet this - a reduction of 892.5 kWh compared to a property that does not have a solar electricity system

This means that even after paying for importing a small amount of electricity from their usual supplier, the Tesco solar electricity system will still generate the homeowner a combined tax free income and saving of £570.66 per year!

*Figures based on example shown using a 2.1 kWp system and 50% usage