UK residents are always looking for ways to save a little money on their utility bills, especially seeing the price of gas and electricity continues to go up. One way to realise some savings is to take advantage of what are known as "feed-in tariffs" (FiTs). Among all of the tariff options in the UK, this one tends to save consumers the most amount of money.
The one downside to feed-in tariffs is the fact that you have to spend money to save money. In other words, in order to take advantage of the tariff, you have to be generating renewable energy on your own property. In order to generate that energy you have to invest in the proper equipment.
History of Feed-In Tariffs
The history of the feed-in tariff dates back to the United States and the mid-1970s. During the presidency of Jimmy Carter, energy prices in the U.S. began to soar. Those price increases, combined with a nationwide panic over the possibility of being cut off from the Middle East, prompted the federal government to begin promoting renewable energy.
One of the plans they came up with allowed consumers to generate their own renewable energy and sell any excess energy they didn't use back to the power companies. Those who did not generate any excess were still eligible for lower prices as a reward for generating their own renewable energy.
At the turn of the 21st century, the idea of renewable energy and feed-in tariffs made its way to Europe. They were introduced in the UK via the Energy Act of 2008. However, they were not fully implemented nationwide until 2010. Today the UK government is still heavily promoting the tariffs as a means of encouraging consumers to generate renewable energy.
How feed-in Tariffs Work
Feed-In tariffs are only half of a program sometimes described as Clean Energy Cashback. The other half of the program is known as the Renewable Heat Incentive, which enables consumers to reap the financial benefits of generating heat through renewable sources. That means feed-in tariffs only apply to electricity.
According to FiTtariffs.co.uk, here's how they work:
- The consumer installs a means of producing renewable energy. That means could be solar panels, a wind turbine, water turbine, or any other qualifying technology.
- When consumer generated power is not enough to meet demand, the excess is made up through a connection to the grid. The consumer pays for that consumption as normal, although his or her tariff reflects a more favourable price than what is paid by someone not generating renewable power.
- When the consumer generates excess power, he or she can sell it back to their utility company for an additional financial benefit.
It is important to note that the amount of money one can earn from selling excess power is greater than the reduced rates the FiT tariff affords. That means the consumer will save even more money by generating as much excess power as possible.
Generating Renewable Energy
The process of generating renewable energy on your own property is where this issue gets sticky. There are different ways to go about this depending on where you live, the size of your property, and your budget. Furthermore, according to the GOV.UK website, you must use a certified installer if you want to qualify for the tariff. You are not allowed to install your equipment yourself.
The two most common forms of renewable energy generation are the wind turbine and solar panels. Both options offer their pros and cons that need to be considered accordingly. If this is something you are seriously considering doing then there are also local regulations to be concerned about.
- Wind Turbines - The wind turbine is just the modern version of the ancient windmill. The big difference between the turbine and a windmill is its appearance. The old-fashioned windmill is typically a large and imposing structure while the wind turbine is more modern and sleek. That said, their use is nearly identical.
- Solar Panels - Solar panels are a great option for those who do not have enough property to make a wind turbine practical. Solar panels can be installed on a roof, on the side of a house, or even on a standalone structure in the garden. They tend to be a bit more expensive than the turbine over the long haul because they require more maintenance and replacement.
While both of these methods of energy generation have been used for decades, they are by no means perfect. The problem with both is that they rely on the cooperation of nature. Under ideal conditions, they can generate a significant amount of energy without question. On the other hand, conditions are rarely optimal thereby resulting in less than optimal energy generation.
The wind turbine is especially susceptible to weather conditions. As such, it is terribly inefficient on a small scale. Perhaps this is the reason more UK consumers wishing to take advantage of feed-in tariffs choose to go with the solar panel option instead.
Solar panels are much more efficient and do not necessarily require bright sunshine to the same degree the wind turbine requires a steady wind. Even on cloudy days, photovoltaic solar panels can collect some measure of light to be used as electricity. There are a few other less popular options for generating your own energy including:
- water turbines
- anaerobic digestion (biogas energy)
- micro combined heat and power (micro-CHP)
Applying for feed-in Tariffs
Before you apply for feed-in tariffs, the government recommends you have your home inspected for energy efficiency. It will not make much sense to invest in renewable energy generation if your home wastes energy excessively. With the efficiency question of the way, the next step is to contact a certified installer to find out what your options are.
The installer will recommend what type of technology is best for your circumstances. You then choose your technology and have it installed according to government regulations. You need to know -- and your installer should already be aware -- that your technology cannot exceed 5MW in terms of peak output.
Once the installation is complete, your installer should provide you with a certificate stating your system meets the requirements of the Microgeneration Certification Scheme (MCS). You will need that certificate when you contact your power company to apply for the new tariff. Provided everything is in order, your power company will approve your application and switch you over.
Combining Feed-In Tariffs with RHI
For the maximum benefits that come from producing your own energy, you can combine the feed-in tariffs with what is known as the Renewable Heat Incentive (RHI). This scheme is similar in that it rewards consumers for reducing the dependence on gas and oil powered heating systems.
By installing and using solar heating, biomass and biogas technology, geothermal heating sources, and certain kinds of heat pumps, you can receive a discount of as much as 8.5p per kilowatt hour. By combining RHI with FiTs, you could significantly reduce your monthly utility bills.
RHI tariffs are set for 20-year increments. RHIincentive.co.uk suggests that the savings the average consumer would enjoy would pay for the cost of the equipment within 7 to 9 years. The remaining years would put money in the consumer's pocket less any expenses to maintain the equipment.
Shopping for Energy Prices
Should consumer-generated energy be part of your future, you need to know that not all energy providers participate in the schemes. In order for you to benefit from the feed-in tariffs or the Renewable Heat Incentive, you will have to use a certified energy provider.
That said, once you have a list of those energy suppliers, it is important to compare their prices for electricity, gas, and dual fuel. There is no point in wasting the money you save by using a company that charges too much. While you are comparing, it's a good idea to find out how much they pay for the excess energy you generate.
The GOV.UK website offers a complete list of registered users with telephone numbers, e-mail addresses, and websites. This is a good starting point when you are ready to apply for your new tariff. Keep in mind that the feed-in tariff scheme is little more than two years old at this point. Both the government and energy suppliers are still working out some of the kinks in the system.
If renewable energy is something that's important to you, getting involved in the feed-in tariffs might be a good idea. Be prepared to invest quite a bit in the technology necessary to make it happen. However, in the long-term most people see enough financial savings to more than pay for the equipment.
Even if renewable energy is not that important to you, you might still consider taking advantage of the schemes simply as a way to save some money. If investing in some technology can help you to produce excess energy you can sell back to our company, you are making money off something that normally would cost you. That's a good deal.
We have list below some of the energy providers in the UK that are also registered participants in the feed-in tariff scheme. Following these links might help you better understand the amount of money you could save by getting involved. Keep in mind you should always shop for utilities by comparing prices.
British Gas - This page is the starting point for finding about their feed-in tariffs. They are currently advertising a price of just £41 per month for electricity for the average consumer participating in the scheme.
First Utility - On this page, you will get a thorough explanation of the feed-in tariff and how it applies to First Utility customers. If you want to participate through them, they offer instructions telling you exactly what you need to do.
E.ON - Offers a good explanation of feed-in tariffs and how they can save you money. If you are currently an E.ON customer, you can download their application directly from this site. If not they provide a link allowing you to check if your current energy company is a registered participant.
NPower - On this site, NPower does its part to explain feed-in tariffs for its customers. You can find additional information including a quick guide brochure and a downloadable application if you are currently a customer.
Scottish Power - Scottish Power participates in both the FiT and RHI schemes. Everything you need to know can be found on this site if you are currently a Scottish Power customer. If you are looking for a downloadable application, it is available at the bottom of the page.
Southern Electric (SSE) - Follow this link to learn about feet-in tariffs for Southern Electric and other SSE companies. You can sign up if you are already a customer by using their downloadable application or writing to them at the post address listed on the page.
There are plenty of certified installation specialists ready to help you take advantage of feed-in tariffs with renewable energy equipment. The number of companies supplying equipment is equally impressive. Here are a few links to directories that will help you locate a certified installer near you.
MCS - This page is part of the Microgeneration Certification Scheme; it lets you search for certified installer in your area. You can search by general location or the various technologies each installer is qualified to work with.
The MCS Installer Directory - A website dedicated to helping UK consumers find a certified installer for their power generation needs. You can search by postcode or fill out a quote request form and have a qualified installer call you back.
Discover Solar - This site is an online directory and information portal with a heavy emphasis on solar energy. In addition to lots of helpful information, they provide a tool by which you can locate an MCS certified solar installation specialist.
GreenBook Live - An online directory focusing on all things environmental and green energy. This particular page explains and MCS scheme and helps consumers find a certified installer in their local area.
Compare My Solar - This website may be specifically focused on solar energy, but it allows you to compare pricing among different MCS installers based on postcode. The comparison includes estimates on how much materials will cost and the potential savings you may enjoy.