The UK Solar Feed-in Tariff

In recent years the UK government has introduced a number of schemes to encourage homeowners to reduce their carbon emissions and adopt renewable energy. Those who invest in solar panels are among the best rewarded, as they are entitled to the UK Feed-in Tariff. The Feed-in Tariff (also known as FiT) is a payment from your electricity provider for each unit of energy you produce through renewable means.

Currently, anyone who fits an average size solar panel installation onto their home is entitled to 41.3p per kilowatt hour (KWh) generated. Solar panels installed as part of a newly built property rather than an existing one will receive a slightly smaller tariff of 36.1p per KWh generated. In addition, for every unit of superfluous energy which is exported into the national grid, a 3p payment will be made on top of the standard tariff paid for the generation. Best of all, the income is completely tax-free.

A typical domestic solar installation might earn you somewhere in the region of £760 a year from the generation tariff. This, coupled with earnings from the export tariff (about £30) and savings on your electricity bill (about £120), mean that an average household could realistically generate an income of up to £960 a year simply through the use of solar panels.

While the UK's feed-in tariff is in its infancy, a similar scheme has been operating in Germany for the last decade, with striking results. Solar power in Germany has created over 200,000 jobs, and currently produces 1% of all the electricity consumed nationally (estimated to rise to 25% by 2050). The UK government is hoping to emulate this sucess, and has committed to keeping the feed-in tariff running for the next 25 years.

So if you are fortunate enough to have the necessary money in the bank to buy photovoltaic panels, you would be hard pressed to find an investment which is more lucrative and secure. You don't necessarily need to have the money to pay for it outright though, as you can take out a loan to cover the installation costs. The feed-in tariff is designed so that the average monthly income from your solar installation will be significantly higher than your monthly loan repayment (on a 25 year loan).

Becoming part of the UK solar feed-in scheme is very simple. Once your solar pv system is installed, you need contact your energy supplier and show them your FiT eligability certificate, which will have been given to you by the installer. They will then confirm that you are eligable for the feed-in tariff, and you will have a new meter installed in your home which will monitor how much electricity is being generated and how much is being exported to the national grid. When everything is set up, you will receive a certificate of confirmation that you are offially part of the UK feed-in scheme.