Produce your own electricity – and be paid for it!

We have long complained that the government wasn’t doing enough to promote renewables. Well, now it’s doing a bit more. In February the government announced the details of the feed-in tariff (FIT).


From April 1st, householders will be paid for every kilowatt of electricity they produce from renewables: that’s photovoltaic panels (PV), heat pumps, wind turbines, hydro, anaerobic digestion and micro CHP (combined heat and power). And a little more will be paid for every kw exported to the grid.


There are different rates of payment for the different technologies. PV will pay the most – 41.3p per kilowatt produced; wind will pay 34.5p; and less for other types. Clearly, the government is keen to encourage PV installations.


This means that householders installing PV could be paid 41.3p for every kw they produce and use themselves, and another 3p per kw if there is spare to feed back into the grid. They will also be saving the money they would normally be spending on their electricity bills. It’s reliably estimated that a return of 6-8% could be made on the investment. This could be between £900 and £1200 a year.


There are catches, of course. You won’t get the feed-in tariff if you have already installed renewables before July 15th 2009, when the initial announcement was made (although you may be eligible for a smaller payment). You will need a large enough roof; and you will only get the maximum return if your roof faces directly south. Then there’s the cost. PV starts at around £10,000 to provide around a 1.5 – 1.8kw system, suitable for a 3 bed semi, for instance. If you want to get the FIT, an accredited installer must be used to fit the system. So fitting the panels yourself, which could be considerably cheaper, won’t get the cash! Although the PV tariff will continue to be paid for 25 years, the amount will reduce slightly year by year after year two.


From February, the grants available for solar electricity ceased. But the government realises that paying for these technologies is expensive, so it has unveiled plans to offer homeowners 20 year loans of up to £15,000 to pay for them, with the safeguard that it would be taken over by the purchaser if the house is sold before the loan is paid off. So it would act like a mortgage. Unfortunately this scheme would need legislation, not possible before the election; and there is no guarantee a different government would pursue it.


And what about renewable heat? There are currently more solar water heating systems installed than PV, producing hot water for the home. They cost less than PV, around £3000 – £4,000 for a typical system. From April 1st next year, payments will be made under the Renewable Heat Incentive (RHI) for new solar hot water installations. The government is consulting on the RHI at the moment, and will announce the RHI rate later. Meanwhile, grants are still available for installing solar thermal systems. West Somerset Council is currently offering grants totalling £900 (ring 0800 096 6356 or visit for information).


The FIT is clearly a step in the right direction. But critics maintain that many households still won’t be able to afford it, even with the potential loan, so it will only benefit more affluent people. Some say the money would be more effectively spent on building large renewable projects like offshore wind, which would supply very large numbers of homes. But everyone agrees that making our existing housing stock more energy efficient is the really urgent task. The FIT is just a step on the way.


For more information on FIT and ways to increase the energy efficiency of your home, visit the Energy Saving Trust website