Government incentives

Overview - Solar Power - Your own roof - Government incentives - Financial attractiveness - Go solar yourself

Feed-in-tariffs (Fits) are government financial incentives that stimulate the use of renewable energy. The new FiT rate of 15.44 pence per kWh is valid from the 1st of November 2012. CompareMySolar uses the new rate of 15.44 pence per kWh in all calculations. The new rate is only valid for systems up to 4 kWp (larger systems receive only 14 pence) and requires your house to comply with certain energy efficiency requirements. For consumers in the UK this means the total financial return of your solar panel system will depend on a number of factors:

• System Outputs (kWh): financial rewards are paid per kWh (unit of energy) as actually generated by your solar system. Hence we have to start with a good estimate of the energy generated by your system based on your own roof details (e.g. location, orientation, angle and shading) and system characteristics (e.g. derate factor and panel degradation over time).
• Feed-in-tariffs: for each kWh generated you will receive a government incentive. The amount depends on your solar system size. In retrofit or new-built systems below 4 kWp it is 15.44 pence per kWh generated. This incentive is guaranteed for 20 years, tax-free, and will rise in line with inflation. The Feed-in tariff only applies to England, Scotland and Wales.
• Electricity savings: each kWh of electricity generated by your solar system can either be used by yourself in your house, or exported (sold back) to the electricity network. Electricity used in your own house is free, therefore you will save on your electricity bill. Current electricity prices are around 15 pence per kWh, but can increase significantly during the more than 25 years lifespan of your solar system.
• Export tariff: when you don’t use the electricity in your own house, you can sell it back to your electricity supplier. Current rates are 4.5 pence per kWh exported, and all electricity companies are legally obliged to pay these tariffs. This export tariff is tax-free and will also be adjusted to inflation.

More details about the current Feed-in-tariff factors is included below. How they combine into a total financial return is shown in the next chapter. 

System Outputs (kWh)

Financial rewards for solar systems are paid for each kWh (unit of energy) that is generated by your solar system. Hence we have to start with a good estimate of the energy generated by your system. This is based on your own roof details as discussed in the previous section: location, orientation and angle, shading, roof size. 

For example, suppose you have a normal England location (Solar irradiation 1.100 kWh / square meter), and a roof facing South East under an angle of about 30 degrees (factor 95%) with very little shading (factor 90%). This way your solar potential would be 85% (95% multiplied by 90%). Now suppose you select high efficiency panels (180 Wp / m2) and you have 10 square meters of roof, which would allow for a system of 1.8 kWp. Also remember from the initial section that due to the derate factor (inefficiencies in panels, inverter and cables), we can only generate around 80% of promised outputs.

The resulting system outputs are calculated as: Solar irradiation * solar potential * system size * system derate factor. In our example this results in 1.100 * 0.85 * 1.8 * 0.8 = 1354 kWh per year. Please note that these electricity outputs are estimates for the first year of operation, and in the next 30 your solar system output will slowly be reduced till about 80% of initial outputs due to solar panel degradation.

Feed-in-tariffs: 

For every kWh generated you will receive a government incentive. The amount depends on your solar system size and whether it is a new built, retrofit or ground mounted system. This incentive is guaranteed for 20 years, tax-free, and will rise in line with inflation. All residential systems provided through our site will be less than 10 kWp, and all our installers are MCS accredited, which is a requirement for being eligible for the Feed-in-tariffs. Please see the table below to find your relevant tariff:

You will require an additional electricity meter to measure the electricity that your system is generating (known as a total generation meter). You will be required to provide meter readings to the electricity suppliers, usually every quarter, which is also the period that feed-in-tariff payments are typically received from your supplier.

Once your chosen installer has installed your solar panels, they will register you on the central FIT database and you will receive a certificate confirming FIT compliance. You must then inform your chosen energy supplier that you are eligible to receive the FIT by providing the certificate. More information can be found here.

Electricity savings: 

Each kWh of electricity generated by your solar system can be either used by yourself in your house, or exported (sold back) to the electricity network. Electricity used in your own house is free; therefore you will save on your electricity bill. Current electricity prices are around 15 pence per kWh, but are expected to increase significantly during the more than 25 years lifespan of your solar system. In the past 5 years electricity prices have nearly doubled through an average growth of 12% per year, far outpacing inflation, as can be seen in the following graph:

Export tariff: 

When you don’t use the electricity in your own house, you can sell it back to your electricity supplier. Current rates are 4.5 pence per kWh exported, and all electricity companies are legally obliged to pay these tariffs. This tariff will also be tax-free and adjusted to inflation. Please note that due to the low export tariff it is financially more beneficial to use the electricity you generate in your own house.

You can use an export meter (may be called a feed-in, feed-out meter) fitted by your supplier to measure how much is being fed back into the electricity grid. Otherwise the amount of electricity exported could be deemed (estimated by your electricity supplier) which usually results in 50% for own use and 50% exported. Utility companies often consider export meter installation non-economical, so instead you will be paid on the basis of this estimation.

Energy efficiency requirements: 

From 1 April 2012, domestic installations must be accompanied by an Energy Performance Certificate (EPC) with a level D or above. Where a domestic property does not meet these energy efficiency requirements, you will receive a lower Feed-in-Tariff of 7 pence. If you have a condensing boiler, cavity wall / loft insulation and double glazing then your house is most likely to already meet the requirements, as do newer houses (e.g. build after 1990). Your house always needs to be assessed by a qualified professional. Your solar panels do count towards the energy efficiency rating.

Overview - Solar Power - Your own roof - Government incentives - Financial attractiveness - Go solar yourself