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How the Feed-in-Tariff (FiT) works

Payment for electricity GENERATED

The 12.47p per unit (KWH) is set by the Government.  The actual electricity generated is measured by a new meter that is installed at your premises.  You are paid for the electricity generated irrespective of whether you use that electricity, or it is surplus and exported to the grid.

 

Payment for electricity deemed EXPORTED

The amount of electricity exported to the grid is deemed by the government to be half of all electricity generated.  This is paid at 4.85p per unit.

 

Saving in cost of electricity BOUGHT from the grid

You also save by using part of the electricity you generate.  For this illustration if is assumed, based on experience, that you use half of the electricity that you generate and therefore do not have to buy it from the grid at a typical 16p per unit.

 

This page provides an explanation of each of the three Feed-in-Tariff payment elements that you receive

These estimated savings are conservative for four reasons:-

 

     1. The savings in this illustration are all tax free.  Most other investments are taxable.  This is important if you are comparing investment options.

     2. The 12.47p per unit paid for every unit is index linked to RPI and will increase each year for 20 years

     3. The 4.85p per unit paid for the electricity deemed exported to the grid is also index linked to the RPI for 20 years

     4. The price consumers pay for electricity, typically 16p per unit, will continue to rise as global energy prices continue to rise; most likely

        by more than inflation.

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