subject: What Are Feed-In Tariffs? [print this page] What Are Feed-In Tariffs? What Are Feed-In Tariffs?
Feed-in tariffs (FITs) were introduced into the UK on the 1st April 2010 as part ofhe Clean Energy Cashback scheme. The scheme was set up to reward UK homeowners who have invested in renewable energy. Under the scheme energy suppliers are required to make regular payments to householders and communities who generate their own electricity. The technology used to generate this electricity must be from renewable or low carbon sources such as solar panels (PV) or wind turbines.
There is also a Renewable Heat Incentive scheme that is due to go live in July 2011 which focuses on heating. Any system installed between now and then will be eligible.
The tariffs were introduced to help increase the level of renewable energy being created in the UK to reach our legally binding target of 15% of total energy by 2020. At the start of 2010 as a country we were only producing about 2% of our energy from renewable sources. It has been estimated that the tariffs should produce 8% of the UKs energy from renewable sources.
The purpose of these schemes is to pay homeowners a guaranteed amount for the energy that they generate themselves and is calculated at a minimum 8% annual return on investment all income tax free. You get paid for every unit of energy you generate plus extra for any surplus units you feed in to the grid. In essence you get paid for the energy you produce. Research has been undertaken that shows that owners of small solar pv systems have received the highest payments, with the payback period now down to 9 12 years.
Which electricity systems are covered by the feed-in tariffs?
Solar Photovoltaics
The technology for solar PV panels has improved at a massive rate, meaning that solar power is now a viable option for many UK homes. Many people still think that you need to be in a very sunny location for solar PV to work, but this is not the case. Solar panels are extremely efficient and effective at generating electricity even on cloudy days.
Wind turbines
These work by the wind turning the blades of the turbines which are linked to an internal generator which produces electricity. The stronger the wind, the more electricity is produced. This source of energy is most effective in exposed rural locations.
Hydro Power
In a broad sense this hydro power generates electricity from water. There are many large hydro dams in Scotland and Wales but for the purposes of tariffs, the most common technology will involve turbines placed in running water. Recently the Environment Agency identified 26,000 suitable sites for these in England and Wales; hydro power is definitely something to look out for in the future.
