Feed-in Tariffs: Make your energy pay

The idea of using renewable technology to save money on energy is nothing new. But what if we told you that you could actually make money by producing your own power? Well, in just a few days, new measures from the government will allow consumers to do just that.
From 1 April, anyone who creates their own low-carbon electricity will be able to receive payments for doing so through new feed-in tariffs (FITs). The move is an attempt by the government to encourage the switch to renewable living practices, and will provide quite a generous income - meaning there is now really no excuse not to go green.
So, with the aid of the Energy Saving Trust, we've put together a guide to tell you the basics about FITs and to help you work out if they could benefit you.

What are FITs and how do they work?
Through the FITs scheme, anyone who registers their renewable electricity system (such as a wind turbine or solar panel) will receive a fixed payment for every kilowatt hour (kWh) of energy they produce. It works on an arrangement with an energy supplier of your choice (though they must have at least 50,000 customers); they will register your technology and you can then make arrangements for payment.

There are two streams of income available through a Feed-In Tariff:

• Generation Tariff: This is a set rate paid to you by the energy supplier for each unit (kWh) of electricity you generate. Once you've joined, you will stay on this tariff for the next 20 years (or 25 years for solar). The rate for new entrants will remain fixed for the first two years and will then change yearly (probably ‘degressing' as the cost of renewable energy installations is expected to decrease). All payments will increase in line with inflation.

• Export Tariff: You will also get an extra 3p per kWh from your supplier for each unit you export back to the electricity grid (ie energy which you create but don't use onsite). The rate you receive is the same across all technologies. All payments will increase in line with inflation.

To give you an idea of the real value of joining, the Energy Saving Trust predicts that a typical domestic solar electricity system, with a rate size of 2kWp could earn around £830 per year in total through the Generation Tariff (£700), the Export Tariff (£25 per year) and savings on electricity bills (£110).

But isn't it expensive to install renewable energy systems
It can be, although as mentioned below, the cost is likely to be outweighed by the benefit in the long run. The government at present has no plans to introduce up-front lending or grants to support FIT installations, but there are a variety of companies offering different incentives to install your renewable technology.

On top of this, homeowners are able to assign their feed-in tariff payments to other parties - meaning there may well be scope in future for arranging loans in this way. EAGA is one business currently offering installations which are funded by later FITs payments.

What is the real return on investment?
This will depend on how well your technology performs. The scheme is aimed at giving a 5 to 8 per cent return on investment, but this is only likely to apply to ‘well-sited' installations. As a result, it's worth testing the potential of your land for wind and solar power generation for between three months and a year before rushing ahead with any installation.

How is the energy measured?
You'll have to get an additional electricity meter to measure how much energy your system is creating, as well as how much is being fed back to the grid.

Can I claim FITs if I installed the technology myself?
No. To access the tariff you must have a Microgeneration Certification Scheme (MCS) accredited installer and use MCS products.

What if I move home?
The feed-in payments will be linked to the home, and you will not be able to move your renewable technologies to another property. If you move out, the new owner of the home will receive ownership of the solar panels or wind turbines and will, in turn, receive the FITs payments.