Earnings with Solar Electricity
On this page: What you get paid | Investment | Tax free earnings | 25 years guaranteed earnings
The Feed in Tariff is a government incentive based on the system that's been used in Germany for years. It pays you a high tariff for the clean electricity produced by your PV system.
01. What you get Paid
The Feed in Tariff pays 21 pence for every kilowatt hour the PV system produces for systems sizes up to and including 4kWp. For systems larger than 4kWp the rate payable is 16.8p.
There is also an extra 3.1 pence a kilowatt hour paid for exported electricity - electricity you don't use which gets sent back to the grid. Usually the amount of exported electricity would be calculated using a smart meter supplied by the electricity company, but until those are fitted to everyones home an export rate of 50% is likely to be used. This means that half of the output of the system will earn a little more money.
The earnings on different sized systems are listed below:
| Size of PV system | Output of PV system | Total FIT earned |
|---|---|---|
| 1kWp | 850kWh | £191.68 |
| 2kWp | 1700 | £383.35 |
| 3kWp | 2550 | £575.03 |
| 4kWp | 3400 | £766.70 |
Please note: These are yearly earnings made by owning a PV system. The amount you can earn means that it is very practical to get a loan, or part-loan to install a PV system.
02. Investment
By owning a PV system you are actually making an Investment, and with a very good percentage rate of return.
The rates of return are higher the larger the PV system is, the following table shows the Return on Investment of different sized systems.
| System Size | 1kWp | 2kWp | 3kWp | 4kWp |
|---|---|---|---|---|
| Return on Investment | 3.33% | 4.79% | 5.23% | 5.90% |
The savings on your electric bill are not included in this percentage calculation, it only takes into account the FIT payments made to you.
03. Tax free earnings
The money earned by generating your own electricity, as in the table above, is Tax free. This means that you actually keep 100% of the money earned.
04. 25 year guaranteed earnings
The Feed in Tariff rates are guaranteed to be paid for 25 years by the government. The rates will also go up each year in line with inflation. They are linked to the Retail Price Index, which is currently around 5%. This means that the earnings listed above are only for the first year of owning a PV system. Each year after that will earn more money.
For example, to work out what you would earn in the second year, take the first years FIT earnings, and add 5% to it. For a 3kWp system, £575 in the first year would mean earnings of £604 in the second year.