Investing in Energy Solutions

Carbon dioxide (CO2) is one of the main greenhouse gases which cause climate change. Over 40% of the UK's man-made CO2 emissions come from energy we use everyday, at home and when we travel. By reducing our personal CO2 emissions, we can all play an important part in the fight against climate change and save money on our energy bills too.

Image | energy, solar, solar PV

There are lots of simple ways to make your home, organisation or business more energy efficient and save money as a result. Are you thinking about getting some insulation or glazing? Or perhaps you are looking for some energy efficient lighting or appliances. One Eco can help you decide the best route for your needs.

Did you know you could be making money from the electricity generated by your renewable technology installation?

Feed-in Tariffs (FiTs) have been introduced into Great Britain as from the 1st April 2010. The renewable energy systems installed through the Feed-In Tariffs and Renewable Heat Incentive will provide 8% of the UK's energy by 2020, that's a lot of power stations shut down and a lot less gas and oil used in Britain. Feed in Tariffs will benefit many people, however on the commercial side, the feed-in tariffs will encourage photovoltaic (PV) installations among farmers, rural businesses, small and medium enterprises, where PV installations could also be linked to other rural development programme and enterprise grants. Feed-in tariffs have been introduced successfully in many countries around the world, including Spain and Germany.

The scheme requires energy suppliers to make regular payments to householders, companies and communities who generate their own electricity from renewable or low carbon sources such as solar electricity (PV) panels or wind turbines up to 5 Mega Watts. Solar Heating Systems are expected to gain similar tariff benefits in April 2011, through the Renewable Heat Incentive initiative.

The scheme guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to the bill savings made by using the electricity generated on-site. This gives the average householder, company or community an excellent opportunity to not only save money, but potentially provide an income too.
*Ofgem will administer the feed-in tariff. Suppliers of energy will be responsible for paying the reward to their customers.

The scheme covers the following electricity-generating technologies, up to 5 Mega Watts fitted by an accredited installer:

• Solar electricity (PV) (roof mounted or stand alone)
• Wind turbine (building mounted or free standing)
• Hydroelectricity
• Anaerobic digestion
• Micro combined heat and power (mCHP) (limited to a pilot at this stage)

All PV installations, private and commercial, from July 2009 are eligible. Domestic installations after 15/7/09 that received a Government grant will not have to repay it to receive the FiT. If you installed prior to the 15 July 2009 announcement you could be eligible for the lower Fit payment of 9p/unit, providing you are a registered micro generator with the Renewable Obligation Scheme (RO) by 31 March 2010.

If you are eligible to receive the FIT (One Eco Ltd can help determine this for you) then you will benefit in 3 ways:

1. Generation tariff – a set rate paid by the energy supplier for each unit (or kWh) of electricity you generate, ranging from 10p/kWh to 43.3p/kWh depending on the renewable energy type. This rate will change each year for new entrants to the scheme (except for the first 2 years), but once you join you will continue on the same tariff for 20 years, or 25 years in the case of solar electricity (PV).

2. Export tariff - you will receive a further 3.1p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn’t used on site. The export rate is the same for all technologies.

3. Energy bill savings – you will be making savings on your electricity bills , because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.

As an example, a typical domestic solar electricity system, with a rated size of 2.16kWp system:
• Annual UK family household electricity bill (5,000kWh@0.14p*) - £700
• Average cost of 2.16kWp system incl 5% VAT - £9000.00
• Electricity savings from system output (assuming 75% used in house) if used in house - £180.00
• Feed-in tariff on all generated electricity estimated at  1913kWh @43.3p - £828.00
• Electricity exported back to the National Grid (assuming 50%) @3.1p - £29**
• Total saving plus income/annum - £1037.00
• Return on Investment - 11%
• Payback Time - 8.7yrs

*This figure will vary depending on your energy supplier
**This assumes 50% of the electricity generated is exported, this could vary

Once your tariff is agreed with the Government it will not decrease.  The introductory tariff will stay the same from 1/4/10 to 31/03/12.  It will then drop each year for future installations. This is to encourage early uptake. All generation and export tariffs will be linked to the Retail Price Index (RPI) which ensures that each year they follow the rate of inflation and the Solar PV tariffs are guaranteed for 25 years. VAT at 5% is payable on domestic installations, New Builds are often VAT exempt, commercial buildings will pay standard VAT rates. The tariffs should cover the initial capital cost and according to the Government, earn a return on average 8% p.a. In practice that means you should pay back the capital cost at least 2 to 3 times over the duration of the tariffs.

Other grants and offers are available to the domestic and commercial markets provided by the government depending on the renewable energy measure taken and in the case of householders the age of the applicant.