Government Schemes to make Alternative Energy more affordable
The UK has a commitment to deliver its share towards the EU target of 20% of energy being consumed coming from renewable sources by 2020.
There are some fantastic gains for the UK economy to be had out of reaching the set target, investment opportunities could provide £100 billion and the sector could create half a million jobs in the renewable energy industry. Currently less than 5% of the UK's energy comes from renewable sources.
Feed-In Tariffs (FITs)
The Government has backed a number of incentives to encourage households to move their energy supplies to renewable sources. The most well known and well used scheme currently is the feed-in tariff scheme (FITs). This scheme is in place for ordinary energy users, i.e. single households, businesses etc. to receive payments for generating electricity from a renewable source for use in the property and to be exported back to the national grid, for which a bonus is paid.
Feed-in tariffs support all renewable electricity generation sources used below 5MW, Micro-CHP which is non-renewable as it is gas powered is also included. The tariffs vary depending on the system installed and the amount of energy being produced.
Benefits of FITs
There are three financial benefits of the scheme:
- A generation tariff, based on the amount of energy generated and the type of system.
- An export tariff, this is for any energy that is sent to the grid to be used by energy suppliers.
- Lower bill payments as less paid for energy is required.
Who pays the FITs payments?
The FITs payments are covered by the energy suppliers, which is passed on to all of their customers! So in basic terms, if you do not have a renewable energy source installed you are paying for those that do. The ins and outs of the payment scheme are more complex, so it does work out fairly, but the basics are as outlined.
How long are the FITs schemes in places for?
For photovoltaic solar panels the scheme runs for 25 years, for Micro-CHP the scheme is 10 years and for most other available sources the schemes are 20 years.
The Renewable Heat Incentive (RHI)
The RHI is similar to the feed-in tariffs, but there are some noticeable differences; the treasury pays for this scheme and there is no ‘national grid’ for heat energy so exporting is not an option. The scheme has been set out to run in phases.
How does the RHI scheme work?
Once you have had a renewable heat system installed in your property; e.g. thermal solar panels, biomass boiler or heat pumps, you measure how much heat energy is being generated. The household is then paid a fixed amount based on the output, technology used and the system size.
The scheme is not available to households until 2012, but there is an interim payment option in place, the Renewable Heat Premium Payment. This is a grant based on the type of technology to help households afford changing their heat source. As with many government schemes there is a set budget for this, so when the money runs out the scheme will finish until the RHI comes into play in 2012.
The Green Deal
The Green Deal is set to come into play in October 2012, final plans are still being discussed. The idea behind the Green Deal is that it will enable households to make home improvements that will have a positive impact on the energy efficiency of their property. The ‘golden rule’, as it has been coined, is that the expected financial savings must be either equal to or greater than the initial financial investment.
How will The Green Deal work?
An accredited consultant will visit the property and assess the energy efficiency; most likely this will be a similar but more advanced version of the energy performance certificates. This will result in a list of measures being drawn up that could improve the energy efficiency and that have been approved as part of the scheme and fit the golden rule.
The property owner is then able to get a variety of quotes, choose a supplier and have the improvements made. The supplier will liaise with the finance provider to ensure monthly installments are taken out of the household’s energy bill to pay for the work carried out.
More information on Government Eco Incentive schemes can be found in the articles below: