The Clean Energy Cashback Scheme – The UK’s Feed-in Tariff

The UK’s Feed-in Tariff, which pays homeowners and businesses money for generating clean green electricity to feed into the National Grid, started in April 2010.

The government-backed scheme called Clean Energy Cashback paid homes and businesses a rate of 36p per kilowatt hour (kWh) produced from small renewable energy systems. Although this scheme is more generous than other schemes worldwide, it is not seen as enough for people to invest in green technology for their homes and commercial premises.

A key resistance is cost

A YouGov survey commissioned by Friends of the Earth, the Cooperative Group and the Renewable Energy Association showed that 71% of those surveyed would consider fitting green technology, such as solar panels, to their homes if paid enough.

Of the 2,000 people questioned, a majority, 70%, also said that they would be willing to pay a little more on their electricity bills (10p per month) for the government to produce a more ambitious green energy plan on top of the already announced £1.17 per month.

On the side of green energy production, 2,000 people were told that the UK currently produces the least amount of energy from renewable sources compared to the 27 countries in the EU. A massive 82% said that the current government’s record of producing energy from renewable sources was unacceptable.

The UK’s first feed-in tariff announced

The government’s announcement of the Feed-in Tariff entitled clean energy cashback hopes to spread the investment of thousands of people in the UK to develop mini green renewable power plants that feed the National Grid. The UK’s current record is poor, with less than 2% of the nation’s energy coming from renewable sources.

Compared with Germany, which has 14% of the nation’s energy from green sites, you can see that the country has a long way to go. It is thought that Germany’s record is excellent because of the generous allowances under their own feed-in tariff rates, which are some of the highest in the EU. Additionally, over 70% of Germany’s green electricity is sourced from people on feed-in tariffs.

The initial rates are generous

At the time of the government’s announcement, they had provided rates for their own feed-in tariffs for the installation of solar panels and small wind turbines as follows:

• less than 4kwp new build – 31p per kWh generated
• less than 4kwp retro-fitted – 36.5p
• between 4kwp and 10kwp – 31p
• between 10kwp and 100kwp – 28p

Could you make money by installing a wind generator at the bottom of your garden? The Guardian newspaper had an interesting table that suggests that the total cost of installation would be around £50,000, which is made up of purchasing a wind turbine that produces 25,000kWh of power each year and £9,000 for the installation costs.

They estimated that you would then receive a payment under the feed-in tariff of around £6,250 per year (based on a FiT of 23p per kWh produced), which provides a 12% return each year. It’s estimated that current wind turbines would last around 20 years.

The UK’s Feed-in Tariff scheme closed to new applicants in 2019.