FIT: Solar PV Income Explained

With over 500,000 domestic PV installations nationwide the benefits of solar photovoltaics are becoming increasingly well understood. Most understand there is some financial gain to be had by installing panels but a surprising number of people we speak to are confused about how the system generates money for them as part of the Feed In Tariff (FIT) scheme.

This week we will help to explain…

Almost everybody understands that the solar panels make electricity and think that it is when they sell this back to the grid that there are “big bucks” to be made and in order to maximise this figure they should turn off as many household appliances as possible whilst the sun shines.

In reality in a domestic situation there is no financial benefit whatsoever to sending surplus electricity back to the grid.

Feed In Tariff (FIT) Scheme

Homeowners benefit in three distinct ways from the government FIT scheme.

1 – Money paid for locally generated electricity

2 – Money paid for “assumed” exported electricity

3 – Savings by using electricity at source

Generated electricity

Every PV installation has a generation meter fitted as standard which measures how many kilowatt hours of electrical energy the system produces. This value every quarter is multiplied by your FIT rate and is paid to you regardless of how the house has been used for this period.

Assumed exported electricity

This value is an assumed or deemed quantity based on the generation meter reading mentioned. The government has additionally agreed to pay for 50% of the measured generated electricity at a much reduced tariff (notionally 4.77p) regardless of whether electricity has been exported or not. Again regardless of how you use the home this value will not be affected.

Savings on site

The one aspect of how the home is used and the aspect of energy efficiency that some find most interesting is the use of free electricity generated by the solar panels that does not require the additional use of mains grid resource. When the sun is shining the electricity produced locally will be used first if you have appliances running within the home.

Once the “free” electricity can no longer keep up with demand the electricity from the grid starts to be used. So for every kilowatt hour of free energy you use you are saving yourself around 12p-14p.

So how do the numbers stack up?

Well if we assume an average 10 panel installation (2.5kWp) produces 1,500 kWh of electricity per year. If you used none of the available electricity the FIT generated electricity would be worth £216 and the assumed export value would be worth £36, giving an income of £252 pa.

If however you intelligently used the free electricity to naturally power lights, computer, fridges, washing machines, hot water etc. you could save yourself up to £195 in imported electricity from the grid.

Maximise FIT By Using Electricity At Source

So instead of turning all your appliances off to export electricity, use it instead. Making use of locally generated electricity could improve your PV income by 77%, and in turn reduce the payback time for the initial installation costs.

So now you know how the system actually generates income for you and what you need to do to maximise your financial gains. Read our blog next week to find out our top tips for optimising your solar PV electricity.

If you have any questions about solar PV; FIT, installation, options available etc. use the comments box below and we will get back to you.

Doug Johnson

Doug is a chartered mechanical engineer and has had the pleasure of being involved in the UK renewable sector since 2008. With wide-ranging operational and design experience in both the domestic and commercial sectors across a wide range of recognised technologies he hopes to be able to share his experience to help enlighten and save you hassle along the way.