An easy guide to the Feed In Tariff and Renewable Heat Incentive changes
April 1st marked the beginning of the new quarter for both the Government’s Feed In Tariff and Renewable Heat Incentive scheme. Both benefit households who generate their own renewable energy either through Solar PV or Biomass.
As with previous years the tariff rate for both schemes has decreased slightly, but households will still benefit from reduced energy bills and savings through the schemes.
How will the changes to the Feed In Tariff (FIT) affect you?
The tariff is fixed for 20 years from the date of the installation of your system and index-linked to maintain its real world value. So if your system was installed before 1st April 2015 you will still benefit from that tariff and not be affected by the new reduced tariff rate.
However, if you install a system after 1st April 2015 and before 1st July 2015, the new Feed In Tariff rates will apply. However, the energy efficiency of your home determines whether you will benefit from the higher, middle or lower rates of the tariff. Your home will need a grade D or above Energy Performance Certificate to benefit from the higher rate.
The new tariff rates are:
Higher rate – 13.39p per kWh
Middle rate – 12.05p per kWh
Lower rate – 6.16p per kWh
What are the annual savings with the new tariff rate?
Calculations based on a 4kW system located on a south-facing roof in an area of the UK with average light levels that generates 3540 kWh of electricity per year, could earn £843 at the new tariff rate of 13.39p per kWh.
Here’s how:
The 4kW system could generate 3540 kWh a year and the household is paid 13.39p for each kW, earning £474. The electricity supplier assumes that 50% of the generated electricity will be used by the household and the excess of 1770 kWh will be exported to the grid. The household is paid again for this electricity at the Export Tariff rate of 4.85p, earning a further £86. The actual amount of electricity generated will translate into savings on the electricity bill. Based on the retail cost of electricity at 16p per kWh, with an assumed 50% usage, the savings to the household will be £283 per year. Totalling £843 a year.
You can find out more about the Feed In Tariff here.
How will the changes to the Renewable Heat Incentive (RHI) affect you?
As with the Feed In Tariff, the Renewable Heat Incentive’s tariff is fixed at the time of your system’s installation. Payments are made quarterly for seven years and index-linked to maintain their real world value.
If you install your system after 1st April 2015 the new reduced Domestic RHI Biomass tariff will apply. You will be paid for all of the heat generated providing the fuel (e.g. wood chips or logs) is purchased from an approved RHI supplier and the system meets the minimum air quality requirements.
What are the annual savings with the new tariff rate?
The Domestic RHI Biomass tariff rate for the new quarter is 8.93p per kWh, opposed to the previous quarter’s rate of 10.98p per kWh. Calculations based on a typical three bedroom detached house with an annual heating demand of 15,000 kWh could see a seven year benefit of £15,624.
Here’s how:
For a typical three bedroom detached house with an annual heating demand of 15,000 kWh, the household is paid 8.93p for each kW of the energy produced, earning £2,232. Over seven years this will amount to £15,624 and the household will also benefit from reduced heating bills.
In addition, if the household also uses solar thermal panels to heat hot water it will receive two Renewable Heat Incentive payments.
You can find out more about the Renewable Heat Incentive here.
For further information about funding and incentives or solar panel installation, call our friendly team on 01242 370 308 who’ll be happy to advise you.
