An update on the Government’s financial incentives:
What return on investment can you expect for installing a solar hot water or solar electric system?
As part of its Climate Change plan, the Government has a target to reduce carbon emissions by 80% by 2050. Renewable energy, such as solar hot water and solar electric, form a key part of achieving this target.
The Government will provide long-term, financial support to householders if they install solar hot water or electric systems on their roofs. There are two separate schemes:
For Solar electric, the Government offers a ‘Feed-In Tariff’
For Solar hot water, the Government offers a ‘Renewable Heat Incentive’
The ‘Feed-In Tariff’ for solar electric update
What is the ‘Feed-In Tariff’?
Through the Feed-In Tariff incentive, known as FIT, you receive payments on your electricity bill to reward you for generating solar electricity. There are three financial benefits of installing a solar electric system.
- A generation tariff, which is a payment for the amount of electricity your system has generated;
- An export tariff, which is a payment for the amount of electricity you automatically exported to the grid, because you didn’t use it in your house.
- A third benefit is the ‘free’ electricity from your system. If you use the electricity as it is being generated (your system can’t store it for later), then you will see a saving on your energy bill.
How much are the tariffs?
Both the generation tariff and the export tariff are awarded per unit of energy – called a kilowatt hour kWh.
The export tariff is 4.5p per kWh.
The generation tariff is currently 21p per kWh for installations before the 1st August 2012.
The tariffs are currently awarded for 20 years, so if you have a solar electric system installed you will receive both financial benefits for 20 years.
After the 1st August 2012, the generation tariff will be 16p per kWh.
What are the tariffs worth for an average system?
If you spend £9,299 on a 4kWp panel system you should earn back:
|
System installed before 1st August |
System installed after the 1st August |
Annual earning |
£1,021 |
£849 |
20 year earning |
£20,426 |
£16,993 |
Payback |
9.1 years |
10.9 years |
The ‘Renewable Heat Incentive’ for solar hot water update
The Government has plans to incentivise the installation of renewable heating, such as solar hot water, by giving householders payments for the heat that they generate. The Government is currently finalising their plans for the Renewable Heat Incentive and it is likely to be launched in Summer 2013.
In the meanwhile, the Government is incentivising the installation of solar water heating through a one-off Premium Payment of £300 to the householder. All households receiving the Premium Payment should also be eligible for the Renewable Heat Incentive when it is launched in 2013. |
