Solar PV Feed-In Tariff drop explained – still great value for money
When the government announced a 65% reduction in the Feed-in Tariff (FiT) for solar energy, down from 12.03pkWh to 4.39p/kWh, it didn’t sound good. The Feed-In Tariff offers guaranteed cash payments for households generating their own electricity from renewable sources, such as Solar PV. The lower tariff will come into effect on 15 January and, at first glance, it looks like a big blow to the solar PV industry and users looking to save money and reduce their carbon foot print. But it’s not nearly as bad as it sounds – solar PV will still save and even make you money while you go green.
Solar PV systems deliver much of their value by saving you money on your existing electricity bill, rather than from the Feed-in Tariff. So, while the tariff has been slashed by 65%, the money you save on your bill still means that a 4kW system will return a total of around £550 a year, down from £800 under the 2015 tariff – an actual decrease of 30%.
With optimum usage of electricity in your home it’s quite possible to reach a total annual return of £800 or more. Even at £550 a year, you can expect to pay for the price of the system within 10-12 years and be making tax-free money for the remaining 8 years of the Feed-In Tariff. And even after the tariff drops off after 20 years, you’ll still be saving money on your electricity.