Making Money From Renewable Energy (Eventually)

So you've had a look at solar power, wind power, or air source heating for your home and the figures just don't add up. Generally speaking, if you live in the UK, they all cost so much to install that they'll take many years to pay for themselves if at all.

This kind of puts domestic renewables out of reach of the majority of the population.

The previous government seemed to have spotted this and saw an opportunity to help the UK meet it's  renewables targets: Enter 'Feed in Tariffs' and the 'Renewable Heat Incentive'.

How Does It Work?

The idea with both schemes is as follows: You get your system installed and register it with the government. You then get savings on your energy bills (thanks to the system) plus an annual payment from the government for having installed it, plus a payment from your energy provider if you export any of the electric you generate into the national grid.

Example

I install solar panels that produce 2Kw, of which I use 75% and feed the rest into the grid. For this I would get £175 savings on my annual bill, £14 for exporting the electric, and £744 from the government for generating electric. A total of £933 per year, of which £758 is new money which would shorten the time it would take for the system to pay for itself. Note: I get even more if I use all the electric - £1026 (including £245 fuel savings a year).

How Long Will It Take To Pay For Itself?

Using the above example, the pay-back period works out like this: The system costs £10k to install (based on the Tesco price). Without the scheme, it would take 41 year to recover the cost of the system (£10,000/245); With the scheme, it would take just under 10 years. These periods would be cut if fuel prices increase.....which, of course, they will.

More Information
The Feed in Tariff (which is for electric generation only) started in April 2010 and you can find out more information here. Whilst the cashback calculator is here (Allows you to see if wind power will work for you as well).

The Renewable Heat Incentive starts in April 2011 but anyone who's installed a renewable heat system since July 15th 2009 will likely be eligible. More information here.