Solutions Inspired Ltd

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How can I benefit from Feed in Tariffs?

These systems would provide annual financial benefits as follows:

Make money from making energy

You will be paid for the energy you generate and you will save money from your current energy bills. For the owner of the property in our example above, this means an excellent annual return of 7.9%. However, because it is Income Tax exempt, this means that if the property owner is paying at the highest 50% rate of tax, the tariff income could actually be worth up to 18.3% per year. This is Government-backed and guaranteed for up to 25 years! As an investment opportunity it is up there amongst the best available.

The energy system and costs quoted above are for a fairly ordinary four bedroom house, installing about 2.5kW of solar PV panels, a solar thermal unit and a ground source heat pump. Between them, the homeowner will generate 40% of all the electricity needed and be able to heat and provide the hot water for the entire home for the year – calculated at 16,000kW of heat. No other heating system will be required.

Our experience has shown that over 95% of all properties can install one or more of the renewable energy systems that are eligible under the tariffs with the vast majority of those systems recouping over twice the initial investment over the lifetime of the tariffs. This does not take into account the fact that the tariff income is Income Tax exempt, nor the effect of rising energy costs which will have far less impact on those who have installed renewable energy systems. This will mean that the savings will actually be greater over time, with additional benefit coming from the fact that the income is inflation linked.

Brief guide to the financial benefits

Income Tax exempt - Both tariff schemes are Income Tax exempt for anyone using the majority of the energy in their own home. Therefore, if your annual rate of return was going to be 8% but you were going to be paying 40% in tax, as you would on other income, then it is in effect worth 15% to you. This is because to actually end up with, say, £1,000 in your pocket after tax, you would have normally had to have earned £1,670.

Rate of return vs. payback

Don’t just evaluate the tariffs based on which year the income will have paid back your initial costs. We talk about ‘rate of return’ because it shows how well your initial investment is working for you. An annual return of 5-8% is good and double that because you don’t have to pay.

Energy savings & energy inflation

Energy will only get more expensive over the next decade. With no gas or oil boiler and far less electricity being imported from the Grid, you are protecting yourself to a considerable extent from such price rises.

Surplus energy payments

Under the Feed-In Tariffs scheme, you get an additional 4.5p/kWh for the surplus electricity you generate and export. You do have the option to negotiate a higher rate if you can. Some companies, like us, will make this easier by negotiating on behalf of all our customers.

Invest now before the Government take the option from you.

An installation of a 4.0 kw PV solar system typically 16 number 250w panels at a cost of £7,200.00

South facing roof with a 30 degree pitch/angle will generate approximately 3334 kWh/per year.

The current Government payback FIT's payments are 15.44p/kh.

This will produce a TAX FREE payment of £514.76 per year for 20 years.

The Government also pay a TAX FREE payment of 4.5p/kh based on 50 % of the energy produced based on you only using 50% of the electricity generated which will equate to £75.00 per year for 20 years.

The saving you will make from the electricity you produce equates to the other 5 % you are not paid for, multiplied by your current electricity charge say at 12p/kWh will save you £200.00 per year for 20 years.

ADD the above together and you will save £789.76 per year every year for 20 years.

This means your installation pays for itself in 9.1 years.

On top of this you will also save on future electricity increases and save even more as inflation has not been calculated in the above.

In all there never been a better time to invest in your future.

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