Feed-in Tariffs, or “FITs” (as they are colloquially known) were introduced on 1 April 2010. The primary attraction of FITs is that they offer a route in to small to medium-sized renewable initiatives which may have previously been prohibitive financially.
The scheme offers potential income/savings in three distinct ways:
- Generation Tariff: a minimum payment guaranteed for all electricity generated by the system;
- Export Tariff: a separate payment made for any electricity exported to the grid; and
- Energy Bill Savings: these can be made by self-use of the electricity generated on-site.
The Generation Tariff is set at the outset of the scheme, depending on the size and method by which the electricity is produced. The tariff is paid by your energy supplier for each unit (i.e. each kilowatt hour or kW h) you generate.
The Export Tariff is set at 3p/kW h. This is paid in relation to the electricity exported to the electricity grid – that is to say the electricity you do not consume on-site.
Energy Bill Savings are self explanatory - because you are generating electricity on-site to power your appliances you don’t have to buy as much electricity from your energy supplier. It has to be borne in mind at this point that if you use more electricity than you generate the shortfall will have to be paid for.
The benefits of the FITs scheme are manifest – however as with all such schemes, deliberation is both prudent and advisable.