A brief introduction to the Tariffs
There will be two tariffs. The first is for electricity generation and is called the Feed-In Tariffs which went live on April 1st, 2010. The second tariff is for heat generation and is called the Renewable Heat Incentive. This goes live in June 2011 although we still await the final details of the scheme. Together these tariffs are sometimes referred to as the Clean Energy Cashback.
The tariffs are designed for everyday energy users, such as homeowners and businesses, as a means of stimulating generation of renewable energy at the place of use such as your home or office. From a financial point of view, the tariffs create three compelling reasons why you should consider installing renewable energy systems:
You will be paid by for the energy you produce and use in your property
You will save money by reducing the amount of energy you buy
You will be paid for any surplus electricity you sell back into the grid
By introducing the tariffs, the Government has made investment in renewable energy systems very affordable. Whilst specific payback times vary, it is estimated that the average installation will achieve an 8% return per year and therefore recoup the initial investment within approximately 12 years for solar PV.
The reason the Government has introduced the tariffs is to help the UK meet its legally binding target under the EU Renewable Energy Directive. This states that the UK Government must increase from 2% to 20% the amount of renewable energy generated in this country by 2020. Given that the tariffs should produce as much as 8% of the UK's energy, it is clear why they are such an important initiative. By installing renewable energy systems in your property, you will be making your own contribution to the UK's environmental sustainability.