Feed in Tariff

Find out more about feed in tariffs - the amount you can be paid for exporting renewable electricity to the National Grid

A feed in tariff (FiT) is is a means for governments to set above-market rates for electricity generated from renewable sources. By obliging electricity utility companies to buy renewable electricity at a fixed price for a fixed number of years, renewable installations become cost effective for the installer. A feed in tariff is effectively a subsidy designed to increase the exploitation of renewable energy sources, and to help goverments to meet their carbon reduction obligations.

UK feed in tariff for renewable electricity generation

How Feed in Tariffs Work

As long as the retail price of electricity is cheaper than the cost of electricity generated from renewable sources, it is difficult to persuade anyone to move away from fossil fuels. However, by offering above market prices - e.g. paying renewable generators 30p per kWh unit instead of the <10p per kWh retail electricity price - utility companies and home-owners will see that there is money to be made by installing PV solar panels (1) and wind turbines (2) etc.

Feed in Tariffs in Germany

The most famous feed in tariff scheme has been the Renewable Energy Law (Erneuerbare-Energien-Gesetz) of 2000 in Germany which followed their Energy Feed in Law (Stromeinspeisungsgesetz) of 1991. These laws have seen feed in tariff rates set for the full range of renewable energy sources and installed capacities with particular focus on solar photovoltaic installations.

The feed in tariff for solar systems rated at less than 30kW has been a whopping 57.4 euro cents per kWh paid for 20 years after installation! Understandably there has been massive take-up of domestic PV solar in Germany.

It has however been calculated that the cost per tonne of carbon (3) saved by this subsidising of solar power in this way has been 900 Euro which is 30 times the cost of a carbon credit certificate. Subsidising large scale wind farms instead of domestic solar installations would have reduced Germany's carbon emissions for a lot less mone helping them to reach their carbon reduction commitments much more quickly.

UK Feed in Tariff

It is planned that a UK-wide feed in tariff will be implemented in the UK for renewable micro-generation to work in conjunction with the existing scheme of ROC (4)'s (renewable obligation certificates). By 2020 the UK is obliged to produce 20% of its electricity from renewable sources, but as things stand the UK will only achieve 5% (and we're currently at just 2%).

NEW 15th July 2009
The UK Government has now announced illustrative feed in tariffs for small wind turbines and photovoltaic solar panels:
36.5p/kWh for small solar photovoltaic systems up to 4kW, and 28p/kWh for systems up to 10kW.
23.0p/kWh for small wind turbines between 1.5kW and 15kW.
These tariffs will replace the current ROC system. Payments will begin on 1st April 2010, but all small wind and solar systems commissioned from now on will be eligible for both LCBP grants and the new feed in tariff.

Click here to read our article Best UK Solar Export Tariff (5) about Scottish and Southern's 18p/kWh tariff paid to owners of grid-tied solar power installations.

Web Link References

(1) http://www.reuk.co.uk/How-Do-PV-Solar-Panels-Work
(2) http://www.reuk.co.uk/wind.htm
(3) http://www.reuk.co.uk/carbon.htm
(4) http://www.reuk.co.uk/Renewable-Obligation-Certificates.htm
(5) http://www.reuk.co.uk/Best-UK-Solar-Export-Tariff.htm