On the 1^st of April 2010, the Department of Energy and Climate Change (DECC) initiated a system of Feed-in Tariffs (FITs) using powers from the Energy Act 2008. This scheme, also known as clean energy cash back, gives regular cash incentives for small scale (below 5 megawatts), low carbon electricity generation. All electricity generated by the installed system will have a guaranteed minimum payment (the generation tariff), and there is an opportunity to export any spare to the National Grid for a further payment (an export tariff). Coupled with the bill savings made by using the generated electricity, it is estimated that home owners, businesses and organisations could receive up to £1000 a year [1]. It is expected that by 2020, over 750,000 small scale low carbon electricity installations will be supported by the scheme and 7 millions tonnes of carbon dioxide will have been saved [2]. Therefore, as homes are estimated to be responsible for over a fifth of UK emissions, there is not a better time to consider your electricity generation options.

Eligibility

In order to be eligible for FITs, the maximum generation capacity is set at 5 megawatts (MW).

Systems supported include:

• Anaerobic digestion
• Hydroelectricity
• Solar photovoltaic (PV) – roof mounted or standalone
• Wind turbines – building mounted or standalone
• Micro combined heat and power (mCHP) – pilot programme aimed at the first 30,000 installations with an electrical capacity of 2 kilowatts (kW) or less.

All systems are required to use Microgeneration Certification Scheme (MCS) eligible products and they must be installed by MCS accredited installers in order to be eligible for FITs support. At present, this scheme does not support solid and liquid biomass technologies; however these will continue to be supported at all scales under the Renewables Obligation (RO). Other technologies such as biofuel generation, fuel cells, wave and tidal energy are not considered to be sufficiently widely used enough to be covered by FITs [3].

There are a variety of tariffs available, and eligibility is based on the size of the system, the installation date of the technology and whether the system and the installer were certified under the MCS scheme. Unfortunately, under the present rules, any systems installed before 15^th July 2009 will not be eligible for FITs unless they were previously registered under the RO or became registered by the 31^st March 2010. Even if registered with the RO, the systems will only qualify for the basic rate of 9p/kWh. Any systems installed between 15^th July 2009 and 1^st April 2010 will be eligible for full FITs but only for energy generated from the 1^st April 2010. Systems installed after this are eligible for FITs from the point of system registration.

Tariffs

Both the generation tariff and the export tariff are linked to the Retail Price Index (RPI) and therefore FITs income for domestic properties that generate electricity mainly for their own use will not be accountable for income tax. The DECC sets tariffs through consideration of technology costs and electricity generation expectations at different scales, and they are set to deliver an approximate rate of return for well sited installations. Once an installation has been allocated a generation tariff, it is fixed for the life of the installation or the life of the tariff (whichever is shorter).

The Generation Tariff

This is a fixed income that can be earned for every kilowatt of electricity generated by a particular system and used within your property.

The Export Tariff

This has been established as an incentive for energy efficiency as you receive payment for every kWh your system exports to the electricity grid and you don’t use. This has been set out in the legislation as 3p/kWh as a base entitlement, however, there is the opportunity to opt out of this and try to negotiate a better rate with your electricity supplier [3]. Energy suppliers participating in the FITs scheme are: