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The Feed-in Tariff (FiTs) scheme
Financial incentives for Renewable Energy schemes
As well as helping our clients’ understand the range of renewable electricity generation schemes that are eligible for financial incentives, we can also provide a full range of financial support services to assist with any investment decision. These include Raising finance, Accounting and Audit, Tax, VAT and Corporate Finance.
The Feed-in Tariff (FiTs) scheme
Feed-in Tariffs (FiTs) were introduced by the Government on 1st April 2010 to promote widespread uptake of a range of small-scale renewable and low-carbon electricity generation. Under the scheme, Licensed Electrical Suppliers (see participating suppliers at www.ofgem.gov.uk), make regular payments to householders, businesses, charities and communities who generate their own electricity from renewable or low carbon sources such as solar photovoltaic (PV) systems or wind turbines. Since its launch the scheme has generated much interest, particularly for larger PV projects.
In general, the FiTs scheme guarantees a minimum payment for all electricity generated by the system (generation tariff), as well as a separate payment for the electricity exported to grid (export tariff). These payments are in addition to the bill savings made by using the electricity generated on-site.
Once you have a renewable energy system installed you should experience a monthly reduction in your electricity bill and then receive an income from your Feed-in tariff provider. However, if you have taken out a loan to pay for the installation you will have to make monthly repayments to your loan company. Feed-in tariffs are designed so that the average monthly income from your installation will be significantly greater than your monthly loan repayment (with a 25 year loan). The scheme covers applicable electricity-generating technologies up to an installation size of 5 Mega Watts.
The Department for Energy & Climate Change has recently announced its comprehensive review of FiTs. Under the proposed changes outlined, Solar PV tariffs (for installations up to 250kW) will be substantially reduced. The proposed installation date has also been brought forward from 31st March 2012 to the 12th December 2011, creating much confusion in the industry. Installations completed and registered on or after the 12th December 2011 will receive the current rates until 31st March 2012 and then be subject to the new reduced rates from 1st April 2012.
The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS scheme. Current tariffs are available at www.ofgem.gov.uk.
How to take part in the FiTs scheme
- Firstly check that you have undertaken some basic energy saving measures to reduce your energy consumption and ensure that the energy you generate is used as effectively as possible
- Decide on which type of renewable energy technology is right for you. Take advice from an approved installer, your energy provider or the Carbon Trust www.carbontrust.co.uk
- Decide on FiTs or ROC’s (Renewable Obligation Certificates). For those generators who do not qualify for FiTs by virtue of their size or nature, an alternative scheme called ROC’s, is available. Under the alternative scheme generators become entitled to ROCs. More information is available on the Carbon Trust website www.carbontrust.co.uk.
- Arrange finance for capital costs. Interest free loans are still available from the Carbon Trust to help with the initial investment. These range between £3,000 and £100,000. We can help with this and any other financial or tax implications.
- Choose your technology from an accredited installer. This will depend on the size of the system being installed. Once your chosen installer has installed your generating technology, they will register you on the central FiT database and you will then receive a certificate confirming FiT compliance. You will have an additional electricity meter to measure the electricity that your system is generating and exporting to the grid.
- You must then inform your chosen energy supplier that you are eligible to receive the FiT by providing the certificate.
Please also see our information on the Renewable Heat Incentive (RHI) scheme.
For more information, help or advice on any renewable energy query you may have, please contact us or call 01392 258553 or 01395 279521 to find out what we can to do to help you.
This information has been written for general interest. It provides only an overview of the regulations in force at the date of publication. It is therefore essential to take advice on specific issues. No responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this leaflet can be accepted by the firm.
