lighting up the bottom line – the Feed-In Tariff
The Feed-In Tariff (FIT) for generating renewable energy was
introduced in Great Britain on 1 April 2010. Under this scheme
energy suppliers make regular payments to householders and
communities who generate their own electricity from renewable or
low carbon sources such as solar PV, micro Combined Heat &
Power (CHP) and wind. FITs are not currently available in Northern
Ireland.
The scheme has led many small businesses,
including nurseries, to consider whether they can make the most of
this opportunity. As well as having a positive effect on the bottom
line, a renewable energy project can improve the sustainability
credentials of your business and, if you operate as a limited
company, can help directors fulfil their obligations under the
Companies Act.
FIT payments are divided into two
elements.
- The 'generation tariff' is paid to all who have installed and
are operating a source of renewable energy.
- The 'export tariff' is either a fixed payment for electricity
exported from the site to the local grid or a payment negotiated
separately on the open market. Some businesses decide not to
export the electricity and to instead to use it to fulfil their own
energy requirements and reduce their electricity bills
accordingly.
Different rates of FITs apply depending on the type of
technology being used and the amount of electricity being
generated. The rates are determined on the basis of those in
place at the time the technology is installed and are then
guaranteed for 25 years in the case of solar PV and 20 years for
other types of mirco generation such as wind turbines. The long
term revenue guarantee makes the projects more readily fundable.
However, the FIT rates for solar PV will be reduced in 2012
so if you are considering this form of micro generation it is best
to get any panels installed sooner rather than later to ensure you
get the benefit of the current higher rate. You should note that if
you apply for a grant to help pay for your installation, this may
affect your ability to claim FITs.
You will need to consider where you might install the generation
technology. Planning permission and specialist legal planning
advice might be required together with consultation with the
appropriate authorities. You may also need to make arrangements
with neighbouring property owners where access is required over
their land to install, maintain or remove the equipment.
If you lease, rather than own, your building you will need to
review the terms of your lease and discuss any plans with your
landlord.
points to note
- Before installing any renewable energy
technology you should check what is suitable for you and whether it
will achieve your objectives.
- You must obtain the necessary permissions before
installing.
- If you are approached by an organisation that already has the
renewable energy equipment and wants to lease installation space
from you and sell the electricity to you, make sure you carefully
check out the terms it is offering.
