Micro-generation subsidy

19 September 2011
I have always been suspicious of micro-generation, and how it can "pay for itself" based on energy sold back to the grid. My suspicion is based on knowledge that peak power consumption also happens to be driven by domestic consumption, which is basically when the surplus generated my micro-generation is at its lowest. After hearing about the Feed-in Tariff on the radio, I decided to find out what this subsidy was.

Demand profiles

Typical daily demand (BBC has a nice 24-hour plot, which tallies fairly well with National Grid statistics) is off-peak until 06:00, and then on-peak until 22:00. Demand is at its highest around 16:30-17:30, depending on season.

Biggest thing to note is that demand it at its highest between 15:30 and 20:30 during the cold & dark winters. Any sane system of energy provision has to be capable of meeting this demand, and this is clearly not going to be helped much by micro-generation.

Government subsidy

If you have a compliant system installed by an MCS accredited installer, you are paid a Generation Tariff for every Kilowatt-hour you generate. On top of this, you are paid an Export Tariff for every kWh you provide to the grid. The Generation Tariff is currently 43.30 pence per kWh, and the Export Tariff is 3.1p. These rates are both guaranteed for 25 years from installation date and are index-linked. And tax-free. For comparison, base-load power-stations generate electricity for between 2.2 and 3.2 pence per kWh. At these prices, it is cost-effective to install a large fan to blow your wind turbine around, should it happen to be a still night.

Since most of the feed-in tariff is independent of whether the energy makes it onto the grid (let alone used), there is an obvious CAP-like incentive here to generate as much as possible. The system was clearly being abused, as the government soon bought in revised (i.e. lower) rates for new sites over 50kW.


Worse than I expected. The feed-in tariff is at least double the typical market rate, and being independent of demand it encourages generation of unnecessary energy. Basically even if none of the energy is actually used, you get around £10 per day per kilowatt. A 50kW installation, maxed out, would earn over half a grand. Guess where that subsidy comes from...