If you generate energy through solar PV, wind or hydro power and claim the Feed-in Tariff then you will be selling a proportion of your energy back to the grid. The majority of smaller generators 'opt in' - the amount they are paid is based on an assumption that 50% of what they generate is used on-site and 50% is exported back to the grid. This process is called ‘deeming’ – effectively a broad brush estimate applied to everyone. We’ve talked to the a number of energy suppliers and most are now strongly encouraging domestic scale micro-generators to ‘opt in’ to the 50:50 ‘deeming deal’. However, for the vast majority of households receiving the FiT, they are not getting close to using 50% of the energy they generate. At most it’s likely to be 30% and, for many, it may be closer to 10%. For properties that are used rarely the figure could be 5% or lower. Many of these households are asking the question – “why are we not being paid more for all the energy we export?”
The short answer is that to accurately measure the energy you export back into the grid requires you to ‘opt out’ and install extra kit – this costs money. For many people with solar PV projects of 4kW or less, the costs exceed the benefits you would get from opting out. A rough rule of thumb suggests that solar PV projects of a capacity greater than 10 kW and wind projects of a capacity greater than 5 kW (due to their higher output) should consider ‘opting out’. Over the next few years the people that own your export meter are likely to upgrade it to a new ‘smart meter’ which should be capable of accurately tracking what you export back to the grid. Hopefully, once this happens, everyone will be paid for what they generate!
GEN’s John Maslen interviews Simon Proctor at Good Energy, the UK’s only 100% renewable electricity supplier, in September 2011 to get the full story about FiT registration and some of the thornier issues around whether to opt in or opt out.
John> Is it correct to say that you can register your FiT project with any of the registered FiT providers? You don’t have to use your existing energy supplier?
Simon> Yes, that’s correct. There is a list of registered FiT providers at http://www.ofgem.gov.uk/Sustainability/Environment/fits/rfitls/Pages/rfitls.aspx. You should be able to go to any one of them to register your FiT project if you think they can offer you a better service – for example being easier to deal with, more knowledgeable, pay you on time, process your application faster etc.
John> Our experience is that many people rely on being advised about their FiT registration from their installer – is that your experience too?
Simon> Yes, we try to establish relationships with all installers and keep them informed on all these issues by providing them with accurate, up-to-date information to pass onto their customers. There is a small financial incentive for installers through our Installer Referral Partnership agreement when one of their customers signs up to our FiT service.
John> Why would someone decide not to register their FiT project with their energy supplier (called their ‘import supplier’) and use the Good Energy FiT registration service instead?
Simon> Although the rates a generator will receive are fixed, the level of service from FIT suppliers will vary significantly. For more than seven years we have offered award winning schemes paying microgenerators for the energy they produce. We have FIT experts in every team at Good Energy and our customer facing teams are all trained in renewable energy and our Feed-in Tariff service, so they can guide new microgenerators through our process to sign up for FIT. Our team members swiftly register customers with OfGem and contact them when they have successfully registered, and Good Energy is working with over 4,000 independent renewable generators all over the UK. Fast processing times are particularly important as the latest deadline for FiT registrations (April 2012) draws closer – making sure your project doesn’t miss this deadline could make a very significant financial difference.
As specialists in 100% renewable electricity supply, empowering individuals to become generators and supporting them through the process runs through the core of Good Energy and we are confident that when it comes to providing outstanding services to generators, we’re experts.
John> If I already have a FiT supplier but I’m not very happy with them, how would I switch to a new FiT supplier?
Simon> Under the FIT license terms you can switch FIT provider whenever you like (as with your electricity supply). So, if you feel that you are not getting a good service you should shop around for a new FIT provider. Switching is very simple – you just need to complete a sign-up form. The old and new FIT provider will then arrange for the switch to take place and (like changing electricity supplier) they will require an end/start read to mark the point that the FIT payments switched over.
John> Do you encourage people to switch to your energy supply tariffs if they use you for FiT registration?
Simon> Of course we would like more people to switch to a 100% renewable electricity supply. However, we realise that this is a choice, so if a customer just wants us to provide their FIT services then we can, although I am aware that some companies do make it compulsory for customers to be supply customers in order to provide them with their FIT services.
John> As an energy generator, why should I consider ‘opting out’ of selling my exported energy in the standard way using the 50:50 deeming process and being paid 3.1p per unit?
Simon> If you ‘opt out’ of the standard deeming process and sell your energy direct to us, we can pay you for all the energy you export – this might be closer to 70-80% of what you produce rather than 50%. We offer a higher payment for the exported units - right now this is 5.3p per kWh instead of 3.1p per kWh and we review it quarterly.
John> So what’s the catch? Why isn’t everyone doing this?
Simon> They’re not doing this because, for the vast majority of generators with solar PV projects of 4kW or less, it doesn’t make financial sense unfortunately. There is also a ‘hassle factor’ as there is more paperwork (see below). You might get an estimated £30 extra annually but this is unlikely to cover the extra costs you will incur – see also our discussion below on Smart Meters which are likely to be coming in fairly soon. To ‘opt out’ generators under 30kW will need to install Non Half-Hourly (NHH) export metering to claim metered export a well as requesting an export MPAN. They would arrange both through their import supplier. In the case of Good Energy (and many others) there is a charge to install the export meter. In our case it is approx. £80.00. There is also an annual maintenance fee to maintain the meter – in our case approx. £60.00. There may be one or two electricity suppliers that will supply you with an export meter for free (provided you are a customer of theirs) when you register your FiT with them (although you may be charged for installation and on-going maintenance). [John - at the time of writing we couldn't find any other suppliers that offered a free export meter although a few months ago they were doing this.]
In our experience, as a rule of thumb most Solar PV generators under 10kW are better off on the ‘deemed’ export rate rather than choosing to ‘opt out’. The costs of fitting and maintaining the export meter will out-weigh the benefits of ‘opting out’ and getting a higher tariff. Due to the increased outputs of a wind turbine application, this threshold may be nearer 5 kW. So wind turbines with a capacity greater than 5 kW should consider opting out unless there is a large onsite demand.
In general small to medium scale generators are always going to want to opt out to get a better rate of return.
Ultimately our job is to make generators aware of the implications and processes involved and guide them through it. Although we advise and support them every step of the way, the choice as to whether they decide to opt out or not is always their decision.
John> So am I right in saying that you need an export meter (with MPAN number) from your import supplier to opt out?
Simon> This is correct. This will need to be supplied and installed by a registered Meter Operator (MO) and requested by the import supplier.
To benefit from being on metered export you need to be aware of the meter installation costs and any on-going fees. It is also important to point out that the process to remove a meter is very onerous, so once the meter is in it is hard to remove and you could be stuck paying a maintenance fee that would eat into your return on investment, so it is better to wait until you have been generating for at least one year if you are unsure of whether or not an export meter is the best option for you.
John> Will the Meter Operator charge you to install one and, if so, any idea how much?
Simon> There is a cost to install the export meter and most suppliers will need to pass this cost onto the customer as an installation fee. For Good Energy customers this is around £80.00, but the costs will vary depending on your supplier.
John> Is there any other paperwork you need if you decide to opt out?
Simon> Yes, Good Energy (like most suppliers) requires generators exporting through a registered NHH export meter to register with OfGem for LECs (Levy Exemption Certificates) and REGOs (Renewable Energy Guarantees of Origin), so that we can claim these on their behalf.
John> Is deeming on its way out with the roll-out of smart meters? In which case will generators then be paid for what they export?
Simon> Nothing has been confirmed but my own feeling is that this will be the case. It is hard to view ‘deemed’ export as anything other than a short term fix until a more cost effective and suitable alternative to NHH export metering, like Smart Metering, can be implemented.
Thanks to Simon Proctor of Good Energy.
The information provided here is accurate for September 2011.
