Feed in tariffs
If you install some small scale electricity generation in your home or business, the UK government will pay you for the electricity you generate – even if you then use it yourself. So installing solar panels, for example, gives you a double benefit – you save on electricity bills because you are producing the power yourself, and the government guarantees you a regular source of income for the next twenty years or so.
Here’s what it looks like for a typical small scale installation. You spend £16,000 to install 20 square metres of solar photovoltaic panels on your roof. This will give you 3kW of power when the sun shines, and will save you about £200 in bills each year. The government pays you each year £1000 as a feed in tariff for the electricity you generate. Each year of the scheme’s guaranteed 25 years you are receiving an annual return of around 8%.
Of course these figures will vary, but it gives you an idea of how the scheme works. It applies to domestic and business settings (although businesses have to pay tax on the income). There are one set of rules for microgeneration up to 50kW (about 300 square metres of solar panel) and other rules for 50kW – 5mW. (5mW is a large wind turbine, such as you would see in a commercial wind farm).