LONGTERM FINANCIAL GAIN
UK Mainland April 2010
From April 2010 the Government is implementing a new system of feed-in tariffs in Great Britain based on turbine capacity. These figures are actually greater than those initially forecast by the Government.
| Turbine Scale | Tariff per kWh |
| 1.5 - 15kW | 26.7p |
| 15 - 100kW | 24.1p |
| 100 - 500kW | 18p |
View the previous figures initially forecast
Production figures for a 10kW turbine in ideal conditions could be approx. 40,000 units produced in a year and with 30,000 for own use. Taking into account the new tariffs, figures for financial gain (excluding installation costs) in such a case would be approximately:
40,000 x 26.7p = £10680 (for units generated)
30,000 x 16p = £4800 (approx. savings against electricity usage)
10,000 x 5p = £500 (for units supplied back to the grid)
Total = £15980 Per Year
Northern Ireland April 2010
The feed-in tariffs are not applicable to Northern Ireland but there will be a new system implemented using 4 ROCs (Renewable Obligation Certificates) instead of the current 2 on offer.
| Turbine Scale | ROCs | Tariff per kWH |
| Up to 250kW | 4 NIROCs | 18p |
| 250kW to 5mW | 1 NIROC | 4.5p |
Production figures for a 10kW turbine in ideal conditions could be approx. 40,000 units produced in a year and with 30,000 for own use. The figures for financial gain (excluding installation costs) in such a case would be approximately:
40,000 x 18p = £7200 (for units generated)
30,000 x 16p = £4800 (approx. savings against electricity usage)
10,000 x 5p = £500 (for units supplied back to the grid)
Total = £12500 Per Year
Republic of Ireland as of Nov 2009
ESB is offering a micro generation tariff of 9 cents per kWh for residential customers.
There is also a further payment of 10 cents per kWh for the first 3000kWh exported annually. This payment will be made to the first 4,000 micro generators connected in the next 3 years and will be paid over a 5 year period.
Production figures for a 5kW turbine in ideal conditions could be approx. 17,000 units produced in a year and with 6,000 for own use. The figures for financial gain in such a case (excluding installation costs) would be approximately:
11,000 x 0.09c = €990 (for units supplied back to the grid)
6,000 x 0.16c = €960 (approx. savings against electricity usage)
3,000 x 0.10c = €300 (bonus payment for units exported)
Total = €2250 Per Year
Production figures for a 10kW turbine in ideal conditions could be approx. 40,000 units produced in a year and with 30,000 for own use. The figures for financial gain in such a case (excluding installation costs) would be approximately:
10,000 x 0.09c = €900 (for units supplied back to the grid)
30,000 x 0.16c = €4800 (approx. savings against electricity usage)
3,000 x 0.10c = €300 (bonus payment for units exported)
Total = €6000 Per Year
N.B. Those with a higher electricity usage will see a considerably quicker payback time.
Micro generation is subject to a rated maximum output of:
- 6kw when the connection is single phase
- 11kw when the connection is three phase.
Tax Relief - United Kingdom
Turbines do not at present qualify for the Enhanced Capital Allowance (ECA) program from the Inland Revenue. However, it can be treated for tax relief in the same way as plant and equipment is classified. The allowances are shown below.
Capital allowances 2009/10 for Plant & Machinery |
| - First year allowance 40% |
| - General writing down down allowance 20% (reducing balance basis) |
| - If on a 40% tax bracket you will save 40% of the turbine value over a number of years |
| - If on a 20% tax bracket you will save 20% of the turbine value over a number of years |
It is important to take this Capital Allowance into account when deciding to purchase a turbine for business use. As a higher rate tax payer an investment of £100,000 will result in a savings of £40,000 in a tax liability over time. This would result in the actual cost being £60,000.
It is important to take this Capital Allowance into account when deciding to purchase a turbine for business use.
Tariffs To Be Exempt From Income Tax
The Pre-Budget Report by the Chancellor on 9th December 2009 stated that income from renewable energy systems will not be taxed. This has been confirmed by the Treasury that both the generation and the export element of the tariffs will be exempt from Income Tax for householders who install systems mainly for use at home. This could be quite a large tax benefit and comes into effect from April 1st 2010.
Extract From Chancellor's Speech
From April, people with a home wind turbine or solar panels who plug their excess power into the national grid, will receive on average £900 a year. I intend to make this payment tax free.
Extract from Pre budget Reportt from Pre-Budget Report
7.37 Households can also play a part in generating low-carbon energy by installing smallscale renewable electricity generation on site. Feed-in tariffs, worth on average £900 in 2010 for households, will provide a financial incentive to install renewable technologies, allowing homes to generate around half of their own electricity. The Pre-Budget Report confirms that households who use renewable technology to generate electricity mainly for their own use will not be subject to income tax on feed-in tariffs. This will save households paying the basic rate of tax £180 in 2010. If necessary, legislation to ensure this treatment will be introduced with effect from 1 April 2010.
7.38 The Government wants all households to play a part in generating renewable energy. Although feed-in tariffs and the Renewable Heat Incentive will make payments over the life of installations, low-income households may still find it difficult to meet upfront costs. Building on the experience of pilot projects for Pay as You Save financing and Warm Front, the Government will consult next year on measures to help low-income households take advantage of clean energy cash-back
