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Cash for renewable energy scheme launched

Feed-in and renewable heat incentives unveiled

People installing wind turbines, solar panels and other low carbon technologies to generate their own energy will benefit from a reward scheme announced by the government today.

The new Feed-in Tariff (FIT) and Renewable Heat Incentive (RHI) schemes unveiled by Secretary of State for Energy and Climate Change Ed Miliband MP, mean households with renewable technologies will receive cash payments for every unit of energy they produce themselves, rather than by using conventional fuels like gas and mains electricity.

Which? has advice on how to buy solar panels, how to install a wind turbine and how to create a more energy efficient home. You can also read our reviews of a range of energy saving appliances as well as energy saving light bulbs and home electricity monitors.

Money for energy

The cash incentive is offered in addition to savings bill payers should expect as a result of using renewable technology. 

According to the Department for Energy and Climate Change (DECC), the FIT means a household with a well-sited 2.5kW solar photovoltaic (PV) panel could get a reward of up to £900 from the excess electricity they generate but don’t use, as well as a further £140 a year saving on its electricity bill.

The FIT will start in April 2010 and will be followed in April 2011 by the RHI – flagged by the government as the first scheme of its kind in the world to encourage low carbon heating technology, such as ground source heat pumps and biomass (wood pellet) heating systems.

Currently around 5.5% of electricity and less than 1% of heat comes from renewable sources – both figures will need to rise dramatically if the UK is to hit the 15% target for 2020. It’s claimed small scale renewable installations, like those on people’s homes, could meet 2% of electricity demand in 2020.

For more energy saving advice, see our guide to cutting your energy bills.

Renewable energy pay back time

Which? energy researcher James Tallack said: ‘A secure, affordable and environmentally-friendly supply of heat and power is vital for our health and wellbeing.

‘We welcome such a strong financial incentive for consumers to generate their own power, as well as the obvious environmental benefits, but the high price of renewable technologies remains a barrier for all but the very well-off.

‘For example, even with savings of £1,000 a year, at current electricity prices it’ll still take around 14 years to get your money back on a solar panel.’

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