Solar PV and the Feed In Tariff – Cernunnos Homes – Version 3.2 – last updated June 2011

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In This document:

  • What is Solar PV?
  • How much Energy Does it Produce?
  • Am I suitable for Solar PV?
  • Choosing the right system
  • The Feed In Tariff
  • Calculating Investment Returns
  • How Important is Inflation Linked?
  • Calculating Investment Returns
  • Installation and Maintenance


What is Solar PV?

  • Photovoltaic (PV) panels turn daylight directly into DC electricity where photons from the light hit electrons in the PV panel, knocking them into a higher state of energy thereby creating electricity.
  • PV is now one of the fastest growing energy markets in the world and originally developed from NASA where PV was used to power satellites in space. Most of us have come across PV technology in solar powered calculators, which don’t actually need the sun light to work, light from an internal ceiling light or lamp powers the appliance.
  • The electricity generated by PV systems is measured in Kilowatt Peak hours (kWp), i.e. the amount of electricity generated in kW during peak hours of daylight. The reason for this unit of measurement is due to the fact that PV systems can vary in performance depending on the amount of light available. Generally, the greater the intensity of light, the greater the flow of electricity generated. Note that PV technology does not need sunlight – just daylight. In this sense a PV system will produce electricity even on cloudy days, as opposed to traditional solar powered heated water systems which need solar heat to generate hot water.
  • The panels are connected together to form an array, and the more panels you have in an array, the greater the amount of energy that can be produced.
  • This DC electricity is then converted to the safe AC electricity through the Inverter which is placed in your loft. The AC electricity then feeds through a “generation meter” and into your fuse board. The generation meter measures how much electricity you have produced.

A Solar PV Array of 6 panels


A Solar PV Inverter

  • From your fuse board, if your property needs the electricity then it will be directed to where it is needed. If your property does not need the electricity then it will automatically be fed back to the grid.
  • Note that currently most properties cannot tell how much electricity they have used and how much they have exported to the grid, as this requires a Smart Meter to be installed. Because of this, the Government allows us to “assume” that you use 50% and export 50%. If you use more then you may want to install a Smart Meter.


How Much Energy Does It Produce?

  • There are over 200 different makes of Solar PV panel on the market currently. Each manufacturer gives each panel a W (Watt) rating – i.e. the number of Watts a PANEL will produce under peak test conditions. Typical panels come in the following W sizes ranging from 170W to 250W, with the “weakest and cheapest” panels being 175W and the most powerful being 250W).
  • To create a system – something we call an “array” – you simply decide how many panels you want / can afford / can fit on the roof. The weaker panels (170) are much cheaper than the strongest (250W).
  • Some clients will be more limited by the amount of roof space, and thus will be focused on the highest power panel that will fit in a certain area. Others will be more concerned about cost and will therefore look towards the cheaper, less powerful panels.
  • Let us assume you want the strongest array you can get. Therefore, we work out you can fit 10 x 250W panels on a roof (Cernunnos do this on the site survey by measuring the roof). This would give a Wp system size of 2500Wp – or 2.5kWp (Kilo Watt Peak). That is, under peak conditions, the system would produce 2,500 Kilo Watt Hours per annum.
  • However, the UK weather does not allow for Peak conditions. Thus we have to adjust for this and we do this by estimating how much the system will produce. There is an industry standard method for estimating how much a system will actually produce and it is called SAP 2005 (SAP = Standard Assessment Procedure). It is a country wide standard, with the base case city being Sheffield. Thus, in places that get more sun than Sheffield (i.e. the South of UK) SAP underestimates a system performance, and vice versa for northern UK.
  • SAP takes into account the azimuth of the system (i.e. which way it faces: South, East or West etc); the angle of the system (i.e. the angle of which it is on the roof – an ideal angle being between 30 and 45 degrees); and how much shading there is (shading can affect a systems performance significantly). In general, SAP estimates that the actual output for a system will be approximately 86% of its kWp size. Thus a 1kWp system will produce 860kWh of electricity in any year in the UK.

Here is a Solar Radiation map of the UK. Anything South of Sheffield will outperform SAP and anything North will underperform.


The amount of energy a system will produce in each month of the year. Even though systems perform all year round, they will produce more in the summer months, when there is more light and the intensity is stronger, than the winter months.



Am I Suitable for Solar PV?

  • There are very few criteria to determine your suitability for Solar PV:
    • Is your roof facing East, West or South?
    • Do you have more than 3sq meters of roof space?
    • Is your roof in good repair and free from shading?
  • If you answered yes to all these questions then you are suitable!
  • Many people also ask the following: 
    • Can I place the systems on an East or West facing Roof? YES
    • What angle must the systems be placed at? ANY!
  • The ideal conditions for Solar PV in the UK are South facing at an angle of between 30 and 45 degrees from the horizontal axis. However, facing an Easterly or Westerly direction, or being at an angle of 65 degrees does not mean the system will not work. It just means the system performance will be reduced slightly. The following table shows performance levels for all types of system installations:


Choosing the right system:

  • There are hundreds of Solar PV panels currently on the market. How do you select the right one for your needs?
  • Panels differ in size, power and cost and thus choosing the right panel depends largely on three factors:
    • How much roof space you have?
    • How much are you willing to spend?
    • How much energy you need/want to produce?
  • Some clients will be more limited by the amount of roof space, and thus will be focused on the highest power panel that will fit in a certain area. Others will be more concerned about cost and will therefore look towards the cheaper, less powerful panels. Those with unlimited space will be more concerned with using the most powerful panel on a cost efficiency basis. Cernunnos considers all these factors when selecting the right panel for a client. We work with over 100 panels and select the best on a cost/performance ratio. We work out the cost per panel per Watt per meter squared – giving us the best efficiency panels on the market. Helping you get the right panel for your needs.
  • Additionally, there will be certain system sizes that are just a no-go. Because the tariff rate is lowered for systems over 4kW and then again for systems over 10kW, it is only advisable to go over these system sizes if the financial reward is advantageous. For example, a 3.99kW system will earn more than a 4.01kW system as the latter falls under a reduced tariff rate of 37.8p (versus 43.3p for systems under 4kW). As you increase the system from 4kW you will eventually find that it becomes advantageous financially. Generally, we say that systems between 4kW and 6kW are not advisable and similarly for systems between 10kW and 12kW. The following chart shows the Annual ROI plotted against the system size (kW):


The Feed In Tariff:

  • In April 2010 the UK Government introduced Feed In Tariffs to encourage the installation of renewable electricity generating technology in all types of buildings across the UK. Under this scheme you are paid a fixed rate for every Kilo Watt Hour (kWh) of renewable electricity that you generate, regardless of whether you use the electricity yourself or not. For electricity that you do not use you will be paid an additional rate for every KWh that you “Feed back” into the national grid, whilst you will also save money on your electricity bills as you will purchase less electricity from your supplier.
  • Technologies eligible include Solar PV, Hydro, Wind and Anaerobic Digestion.
  • The Feed in Tarrif system is open to everyone including households, businesses, schools, hospitals, local councils, and community projects – in fact any renewable electricity project under 50MW.
  • For a Renewable electricity generating system to be eligible for a FIT payment, they must be installed by an MCS (Microgeneration Certification Scheme) accredited company.
  • The FiT has 2 payment components:

Generation Tariff: a fixed payment by your electricity supplier for each KWh of electricity you generate, regardless of whether you use it or not. The table for the Generation tariff is:

  Pence per kWh Lifetime of Scheme (years)
Solar PV <4kW (retro fit) 43.3 25
Solar PV >4kW (new build) 37.8 25
Solar PV 4-10kW 37.8 25
Solar PV 10-100kW 32.9 25
Solar PV 100kW-5MW 30.7 25
Solar PV Standalone 30.7 25
Wind <1.5kW 34.5 20
Wind >1.5-15kW 28.0 20
Wind >15-100kW 25.3 20
Wind >100-500kW 19.7 20
Wind >500-1.5MW 9.9 20
Wind >1.5-5MW 4.7 20
Micro CHP <2kW 10.0 10


Export Tariff: a payment that has a floor price of 3.1p per kWh from your electricity supplier for each unit of renewable electricity that you generate but do not use and thereby “Feed Back” into the national grid. The amount that you feed-back into the grid will eventually be measured by Smart Meters, which will be installed in every house in the future under a Government scheme. However, until the use of Smart Meters is more widespread, the Government has set out that 50% of total electricity generation will be “assumed” to have been exported. The 3.1p/kWh is also a “floor” price, and renewable energy generators (i.e. participants in the FIT scheme) can negotiate higher Export Tariffs with their energy supplier

  • Let us assume you install 10 x 250W panels on your roof. This would give a Wp system size of 2500Wp – or 2.5kWp (Kilo Watt Peak). Using SAP 2005 we then estimate that your system will produce at least 2,100kWh of electricity every year.
  • Therefore, assuming you are on the standard domestic FiT tariff, you will receive a payment of 43.3p for every kWh that you produce:

43.3p x 2,100kWh = £930.3 = Generation Payment from FiT

  • Let us also assume that you only use 50% of the electricity you produce (this is what the Government allows you to assume until Smart Meters are installed in every home by 2014). Thus, by exporting the other 50% of the electricity you generate, you also get paid:

3.1p x 2,100kWh x 50% = £32.55 = Export Payment from FiT

  • Finally, if you are exporting 50% of the electricity you generate, you will therefore be using the other 50%. This electricity is free and replaces electricity you would otherwise have bought from your supplier. Assuming current electricity prices from your supplier are around 13p per kWh, you would therefore be saving the following from your annual electricity bill:

13p x 2,100kWh x 50% = £136.50 = Annual Reduction in Electricity Bill

  • Hence, in total you would make annual savings of:

£930.30 + £32.55 + £136.50 = £1,099.35 = Total Annual Savings

  • The £962.85 is a payment that is made from you ELECTRICITY SUPPLIER to you. Every time you get an electricity bill, it will show this credit (for quarterly bills the credit will be a quarter of this on each bill).


Calculating the Investment Returns:

  • In the previous example, let us assume that the system cost £10,000 fully installed including VAT. From that we can work out the following:
  • The consumer saves £1,099.35 every year (inflation linked) for 25 years. This gives a total figure of £27,483.75.
  • This gives an annual ROI of 10.99% or an APR of 4.13%!
Initial Investment £10,000
Total Return over 25 years £27,483
Net Profit over 25 years £17,483
Payback period (years) 9.1
% Return over 25 years 274.84%
Return on Investment (ROI) over 25 years 174.84%
Annusl ROI 10.99%
Annual APR 4.13%
  • Also, these returns are:
    • Inflation linked
    • Guaranteed for 25 years
    • Protect you from rising energy bills
  • For many businesses, schools and housing associations, costs can fall significantly when they purchase larger systems. This is because the installation costs are reduced, and bulk purchase discounts can be achieved. It is not unreasonable to expect an annual ROI of 15%+ and APR of 6% (inflation linked!)


How important is “inflation linked”?

  • In April 2010 the Feed In Tariff rate for existing and new participants was increased by 4.8%!
  • Energy Price Inflation is expected to be in excess of 15% per annum over the next 3 years!
  • Inflation, as measured by the RPI, is currently at a 20 year high!



System Costs:

  • At Cernunnos Homes we offer a range of fixed price systems:
System Size Cost Annual Saving Annual Return On Investment Payback Period
8 Panel Solar PV 2kW £8,000 £829 10.46% 9.5 years
12 Panel Solar PV 3kW £9,750 £1,243 12.78% 7.8 years
16 Panel Solar PV 4kW £11,750 £1,658 14.13% 6.9 years


The Installation Process & Maintenance:

  • Domestic installation can take as little as a single day to complete. There are 3 main components to installation:

1. Scaffolding erected

2. Solar Panel Mounting frame is fixed to the roof rafter, sliding underneath the existing tiles, meaning there is no need for any roof work

3. The Inverter is installed in your loft and connected to the Solar Panels. The Generation Meter is then installed next to your fuse board and connected.

  • Maintenance is relatively simple, with the panels possibly needing cleaning once a year. Cernunnos Homes offer this service. We can also monitor the performance of the panels, ensuring you get the maximum from your system.