Public Sector and Charity Feed in Tariff

The government has now responded on its consultation document and has set out feed-in tariffs up to 5MW. Feed-in tariffs come into force in April 2010.  The FIT is comprised of a "generation tariff" plus an "export tariff".  Both are linked to the retail price index (RPI) and therefore maintain their value in real terms.

Illustration of potential electricity flows for an on-site generator 

(Source: Government Response on FIT Consultation)

In this diagram, the site generates 2,000 kilowatt hours (kWh) per annum e.g. from a solar PV panel). They use 1,000kWh of the electricity they generate. 1,000kWh is exported, because it is generated at times when the household does not use it. The household uses a total of 4,500kWh per annum. Therefore, they need to import 3,500kWh from their electricity supplier.

Under the scheme if the tariff for generation is, for example, 30p/kWh, the generator will receive a FITs payment of £600 per annum (2000kWh x 30p) for the electricity they generate. They will also receive a payment for the electricity they export; assuming a price of 3p/kWh this would be £30 (1000kWh x 3p). They also derive a benefit from the 1,000kWh they generate and use on-site as that will offset 1,000kWh they would otherwise have had to buy from their electricity supplier. Assuming an import price of 10p/KWh this would be a saving of £100 (1500kWh x 10p).

There will be instances of generators installing two types of technology on the same site (e.g. a school may install a wind turbine and solar PV panels). Each technology will receive its own tariff so the generator will receive different payments per unit generated from the different technologies.