Generate Your Own Energy to Save Money (and the Environment)

Solar Energy

Many people are worried about rising energy costs – not just the financial costs but the toll on the environment as well. Fortunately in the UK, it’s possible to save or even make money by generating your own energy in ways that are beneficial to the environment as well as to your pocketbook. You’ll save money on your bills since you will be using your own electricity instead of purchasing it from a supplier. And if you install specific technologies such as solar panels or a wind turbine you might even get money from your supplier under the government’s FIT (Fee-in Tariff) scheme. You can also benefit from the Renewable Heat Incentive (RHI).

First introduced to the UK in April 2010, Feed-in Tariffs replaced UK government grants as the chief financial incentive to foster renewable energy-generating technologies. A similar scheme, the RHI, was introduced in 2011 for heat generation in order to provide payments to industry, businesses and public sector organisations. In April of 2014 the RHI was expanded to include homeowners, private landlords, social landlords and self-builders.

If you’re interested in saving or making money by generating your own energy, here are a few facts you need to know.

  1. You won’t get an instant ROI. You won’t see a return right away, as in most cases you have to pay for installation of your energy-generating equipment, which can be quite expensive. It could take years to pay for itself. But this isn’t about instant gratification; it’s about doing what’s best in the long term.
  2. Though your electric bills will be reduced, savings will vary. Once you begin generating your own electricity, you will see savings on your electric bills. After all, as noted above, you don’t have to buy as much electricity from your energy supplier. Of course, the amount you save will vary depending upon how much electricity you use.
  3. You might be able to MAKE money if you’re eligible for Feed-in tariff (FIT) payments. In addition to lower bills from your supplier, FITs provide two key benefits: A generation tariff, which means you get paid for generating electricity (your supplier will pay you a set rate for each unit (or kWh) of electricity that you generate); and an export tariff, where you get paid for generating surplus electricity. Your supplier will pay you an extra amount for each unit of electricity you put back into the grid, meaning you will be selling any electricity you generate but don’t use yourself. You’ll probably be eligible for the FIT programme if you generate your energy using one of the following methods: solar electricity, wind turbines, hydro-electricity or anaerobic digesters. The money you can make through the scheme varies depending on the amount of electricity you use yourself and the type of technology you have installed. Since the government sets the amount you make per unit that amount is always subject to change. Also realise that some small electricity suppliers are not required to participate in this scheme so may not be obligated to give you FIT payments. In any case you’ll find a list of FIT-licensed suppliers on Ofgem web site: www.ofgem.gov.uk.
  4. Consider the Renewable Heat Incentive (RHI) scheme. The purpose of the RHI is to help the UK reduce greenhouse gas emissions and meet targets for reducing the effects of climate change. It does this by providing incentives for generation of heat from renewable energy sources in lieu of fossil fuels. For more information on the RHI from the Department of Energy and Climate Change, see https://www.gov.uk/government/policies/increasing-the-use-of-low-carbon-technologies/supporting-pages/renewable-heat-incentive-rhi.

When considering “free” solar panel deals or “rent a roof” schemes, read the fine print. No doubt you’ve seen ads for ‘free’ solar panel deals where you basically rent your roof and have solar panels installed on it. The advantage of these deals is that you don’t have to pay upfront for the solar panels and you’ll benefit from the free electricity they produce. But the company generally claims all the generation and export tariff payments so even though you’re saving money, you won’t make any money. Still, if you really can’t afford the installation costs, don’t want to take out a loan and don’t care about making money with the use of the panels, you can benefit from such a deal. Just be sure you carefully read the legal fine print before participating in any such scheme.

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