If you were intrigued by how Christine Shine halved her electricity bill (Town & Country, March 10) at her Gloucestershire home, you may be tempted to follow her example. But is it really that simple? Anyone generating their own low-carbon electricity can, from April 1, be paid per unit of power they generate-even if they consume all of this electricity themselves. This is part of the Government’s drive to meet its targets for the proportion of the nation’s electricity that is provided by renewable sources.
These feed-in tariffs (FITs)-also known as clean energy cashback-are available to any household, business or community that generates electricity from solar photovoltaic (PV) panels, wind turbines, hydro, anaerobic digestion or micro-combined heat and power (micro-CHP). The tariffs come as tax-free income and the Government hopes that households, businesses and even small communities will install their own renewable-energy systems attracted by the returns available.
Secretary of State for Energy and Climate Change Ed Miliband believes that a typical domestic installation of a 2.5 kilowatt peak photovoltaic system could earn ‘the average household £900 each year and save £140 on its annual electricity bill, giving a return of 5%-8%’.
The Energy Savings Trust has calculated that a typical PV system requiring no loan finance will take 15 years to pay back and a wind system seven years. James Morgan, a solar expert at npower, concurs: ‘The extra financial benefit offered by FITs means that the payback period for a PV system has been reduced to about 15 years for a typical installation costing about £12,000.’
However, if the investor took out a loan to pay for the system, the payback times obviously recede further into the future-a loan charging 8% interest would result in it being 20 years for a PV system and 15 for a wind one before you break even. One snag, of course, is that, on average, a family will move every seven years.
The Government argues that having its own generator will make a property more valuable and saleable. Others are sceptical of this. Estate agent James Wyatt of Barton Wyatt, who has designed his own house, says: ‘My energy-conserving devices save me several thousands of pounds a year, but that will not be a deciding factor for any buyer of my house-it’s just a nice little bonus.’
The system of tariffs is complicated, with various bands of payment depending on the type of technology installed, the scale, and when it was installed. The smaller the scale, the greater the tariff (as small-scale installations are less efficient and so produce less). The tariff payments are fixed from when you enter the scheme, but are inflation-proofed, and for new installations will run for 25 years for solar, 20 for anaerobic digestion, hydro and wind and 10 years for micro-CHP.
The present tariffs are fixed for anyone entering the scheme before April 2012. For anyone entering the scheme after this, the tariff levels fall for wind and solar schemes, although those for other technologies remain the same. This is because it’s hoped that demand for solar and wind technologies will reduce the cost of their installation, necessitating a smaller incentive.
The FITs scheme is to encourage new installations, rather than rewarding existing users, so those who installed a system before July 15, 2009, will receive much lower payments of 9p per unit regardless of technology or scale, and this tariff runs until 2027. If your system was installed before July 15, 2009, and is accredited under the previous Renewables Obligation (RO) scheme, then you will be automatically transferred onto the FITs scheme in April. If you aren’t accredited under the RO, then you must get accreditation before March 31 to be eligible for FITs.
If you wish to install a gene-rator and join the scheme, you need to use an accredited installer to install a technology approved by the Microgeneration Certification Scheme (www.microgenerationcertification.org) run by Gemserv. Once registered, the owner will then be paid for the set period, through their electricity supplier, for the renewable power they generate, with an extra 3p per unit paid for any surplus power exported to the grid.
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