The Department of Energy and Climate Change (DECC) introduced Feed-in Tariffs (FITs) to encourage individuals and businesses in the UK to generate renewable energy. FITs are a new financial incentive for renewable generators with an installed capacity below 5MW.
FITs aim to make renewable energy generation more financially viable by guaranteeing generators a long term fixed price for the renewable energy they produce. This will help the UK reach its 2020 target of generating 15% of the UK’s energy from renewable sources.
FITs consist of two tariffs: a Generation Tariff and an Export Tariff.
A fixed rate that a generator receives for every kilowatt of renewable energy generated regardless of where the energy is used. To measure the generation there must be an Ofgem approved generation meter connected to the installation.
A fixed 3.1p/kWh rate for the surplus amount of energy which is sent back to the electricity grid. This is measured by an export meter onsite and will initially be estimated for smaller installations. Generators will recieve the export tariff in addition to the generation tariff.
The generation and export tariff is guaranteed for twenty-five years, is RPI linked and are paid quarterly by licenced energy suppliers.
FITs are designed to encourage generators to use as much electricity onsite as possible, rather than exporting it. This is a carbon effective approach because during the process of transferring power across the Transmission System, some of the power is ’lost’. This lost power is known as transmission losses and currently accounts for about 1.5% of the electricity transmitted.
So by using the energy generated onsite none or very little renewable energy will be lost due to transmission. In addition the site should also see a corresponding decrease in electricity bills because less standard mixed energy will be required from your energy provider.