Householders could earn £900 in feed-in tariffs

Householders could reduce energy bills by £140 a year and earn up to £900 a year by installing photovoltaics according to details published today on feed-in tariffs.

The announcement made by Ed Miliband, energy and climate change secretary, will mean that households and communities who install generating technologies such as small wind turbines and solar panels will, from April, be entitled to claim payments for the low carbon electricity they produce and will also be paid for any electricity they feed into the grid.

The level of feed-in tariffs varies depending on the technology and the size of installation and will be linked to inflation. They are designed to give a 5-8% return on investment.

A 4kW photovoltaic array on a new build home for example would receive 36.1p/kWh in the first year while energy generated by a 1.5kW micro wind turbine would receive 34.5p/kWh. The tariff will last between 20 and 25 years.

Miliband said:"The guarantee of getting an income on top of saving on energy bills will be an incentive to householders and communities wanting to make the move to low carbon living.

"It will also change the outlook for a range of industries, in particular those in the business of producing and installing small scale low carbon technology."

The scheme will also apply to installations commissioned since July 2008 when the policy was announced.

The Department of Energy and Climate Change also published plans for a scheme to incentivise renewable heat generation at all scales.

This will come into effect in April 2011 and guarantee payments for those who install technologies such as ground source heat pumps, biomass boilers and air source heat pumps.

The heat incentive is aimed at helping consumers who are off the gas network lower their fuel bills and gain a cash reward for greening their heating supply.