Electricity Feed-in tariffs
At the start of February this year the Department of Energy and Climate Change (DECC) announced the long awaited, long delayed feed-in tariffs for microgenerated electricity. These payments are designed to be an incentive for individuals and businesses to invest in small-scale alternative generators that can feed electricity into the grid for general use. The main micro-sources are solar PV cells and wind turbines. If current targets are met, by 2020, 15% of UK energy needs will be generated from renewable sources, including microgeneration. This represents an almost seven-fold increase from the 2.25% in 2008.
Why bother with Renewable Energy?
There are two reasons why the Government is bothering: economic, and environmental.
In the heyday of North Sea oil and gas, the UK was a net energy exporter. But since 2004, we have had to rely on imports to generate electricity. By 2008, 20% or our energy requirements were imported: 12% coal, 7.5% gas, with oil and electricity imports making up the rest: a total cost in excess of £10bn.
The Kyoto Protocol identified a basket of four ‘greenhouse gases’ as the main causes of Global Warming. The UK has signed up to the EU Renewable Energy Directive, in an effort to reduce our reliance on technologies that generate these greenhouse gases. The main greenhouse gas, carbon dioxide, is created by the burning of fossil fuels such as gas, oil and coal – particularly for the production of electricity.
Renewable energy, particularly large projects such as off-shore wind farms, is a major way of reducing both our reliance on imported gas and coal, and carbon dioxide levels.
How much do you get for microgenerating electricity?
Feed-in tariffs vary according to the technology. Solar PV installations will receive anything from 29p to over 41p per unit (kWH) generated. Wind Turbines between 24p and 34p per unit, dependant on size. Hydro, 11p to 19p. And these figures are paid for the generated electricity – so owners still get paid if they use it themselves.
In addition to FIT, electricity suppliers will purchase the ‘excess’ electricity that is not used locally. Suppliers have a commitment to supply electricity that has been generated from a renewable source – if they have not purchased it, they cannot supply it. Figures will vary by supplier, but it is expected to be between 4p and 8p per unit.
So how might this change the UK landscape?
For some microgeneration technologies, the economics look quite impressive. Small wind turbines for example, capable of generating up to 50 kW, might generate 120,000 kWH per annum – even more if sited in a particularly windy location. That equates to a feed-in tariff of almost £29,000 a year, plus income from supply into the grid of another £5-10,000. A 50kW turbine will not fit in your back garden or on the roof, but neither is it a 50m high giant visible from miles away. A 50kW turbine will typically sit on a mast around 18m tall. So if you have some land and a windy spot, 50m or more away from the neighbours, then a wind turbine could be a real investment opportunity for you.
I am certain that in two or three year’s time, these smaller wind turbines will be sprouting up across the country in farms, caravan parks, equestrian centres – in fact any businesses with some land. And by the end of the decade, most farms in the UK will have at least one, sitting quietly in the corner of a field, making money.
Feed-in tariffs will start to be paid in April 2010. For more information, please follow this link to the DECC website: Cash Rewards for Low Carbon Electricity and Heating.
If you think you might be interested in getting a Wind Turbine, please contact us at enquiries@ailnothconsultants.co.uk
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