Feed-in tariff starts to generate cash

Householders with small-scale green energy systems such as solar panels and micro-wind turbines will receive up to £1,000 a year for the electricity they generate under a new government scheme that starts paying out today.

The level of payments for the Clean Energy Cashback scheme – or feed-in tariff – were unveiled by the energy and climate change secretary, Ed Miliband, in February and homeowners who participate can start earning money from today.

According to government figures a typical 2.5kW solar pv installation could offer a homeowner a reward of up to £900 and save them £140 a year on their electricity bill. A similar scheme that will incentivise low-carbon heating technologies could be introduced in April next year.

Despite the payback, the upfront cost will put off many householders, with the average price of the installation of solar panels around £10,000 to £12,000.

British Gas and a number of other industry partners are trialling a Pay As You Save scheme with the Energy Saving Trust, where householders will pay back the upfront cost through the monthly savings on their bill, but it involves just 500 households.

Despite the cost, energy company Solar Century said today it had seen a fourfold increase in sales enquiries since the tariffs were announced in February.

Friends of the Earth today welcomed the scheme as providing a "tremendous opportunity for people across the UK to play their part in the green energy revolution".

Its executive director, Andy Atkins, said: "The Clean Energy Cashback scheme will allow householders to earn tax-free cash by turning their homes into mini green power stations, cut fuel bills and play their part in tackling climate change.

"UK homes are responsible for over a fifth of UK emissions but by slashing energy waste, and fitting renewable electricity systems such as solar panels on our roofs and wind turbines in our gardens, they can be part of the solution to climate change."