Feed-in Tariffs for Hydroelectricity
Feed-in Tariffs (FiTs) are government subsidies which allow you to receive money for energy generated by your renewable energy installation that is fed to the National Grid. This is referred to as the generation tariff.
Along with lower energy bills, FiTs present the principal financial incentive for those who install green energy systems in homes, organisations, communities and businesses. FiTs allow to you receive money (tax free for non-business installations) from your energy supplier for every kilowatt hour (kWh) of electricity generated by your low-carbon energy installation.
FiTs also provide income for every unit of surplus energy that you do not use and export back to the grid. This is referred to as the export tariff. Off-grid systems are not eligible for the FiT export tariff, though they may still claim the generation tariff. For projects such as community installations, none of the electricity produced is fed directly into local homes but instead is exported to the grid and the resulting profit is then fed back into the community.
NB. For businesses, FiT payments count as income and will be taxed accordingly.
Despite their somewhat misleading name, Feed-in-Tariffs pay you for all of the energy that the hydroelectric system produces, whether you consume it yourself or sell it back onto the national grid.
The current FiT generation rates (valid until 31st March 2014) for hydroelectricity generation are as follows:
|System output/capacity||Feed-in generation rate tariff|
The export tariff for all system sizes (and indeed all eligible renewable energy generation installations) is 4.64p/kWh.
A table of FiT rates for other renewable energy sources is available on the Ofgem website.
The rate at which energy is exported back onto the grid is dependent upon your installation’s output and your energy consumption.
NB - Feed-in Tariffs are not currently available in Northern Ireland.
FiT rates are subject to change and only apply to systems installed before 31st March 2014. Tariffs are reviewed periodically by the Department for Energy and Climate change (DECC), but are locked in for a period of 20 years (the tariff ‘lifetime’) from the installation of the hydro system. FiT rates are also linked to the Retail Price Index (RPI), so they will rise with inflation.
For more information about the Feed in Tariff scheme, visit the Department for Energy and Climate Change website.