UK Feed-In Tariff is Residential Customer Friendly
Unlike many European Feed-In Tariff or FiT systems where electricity generated is purchased at a higher price and sold at a commercial rate, UK Clean Energy Cashback Scheme pays for all the electricity a household generates, add a small amount for electricity exported to the grid and allows owners to use generated electricity for free. Feed-In Tariff is locked at the moment a system is installed and adjusted annually for inflation through CPI index for 25 years.
So if you purchase a residential solar system of up to 4kWp by April 1st of 2012 you would lock-in UK Feed-In Tariff payments of 43.3p/kWh for all the electricity generated, indexed with CPI for 25 years, 3.1p/kWh for half of your electricity generation as assumed export, indexed with CPI for 25 years, and you would be allowed to use generated electricity for free as much as you can, provided that you use it at the moment it is generated.
On top of that, households do not need to register for VAT and they do not pay VAT on energy exported to the grid.
On top of that, income from electricity sales is not subject to income tax.
Currently, households can get 16% and better annual profits (IRR = 16%+) tax free on solar systems up to 4kW. Feed-In Tariff is reviewed every year and slated to fall at a pace of 7% a year or more, depending on market prices for solar installations.
This should convince every homeowner to go solar as soon as possible.
Of course, if an average 3kWp system is built on 20.000.000 homes in UK, distributed capacity would amount 60gW and would contribute 50TWh of electricity annually. UK needs 372 TWh of electricity (data for 2008) so that kind of gigantic project would bring solar to contribute 15% of all electricity needed in the UK. However there is about 3000 days until 2020 and that means that on average 6.666 units should be placed on roofs in UK daily, weekends and holidays included.
Current pace is far below.
“Continuous effort – not strength or intelligence – is the key to unlocking our potential.” – Winston Churchill
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