Households and communities who produce their own electricity through so-called 'micro generation' schemes can profit from the energy produced by selling it back to the national grid through a guaranteed Feed in Tariff (FIT) scheme.
Introduced in April 2010, the scheme sees energy supplies make guaranteed payments for electricity generated by small-scale renewable or low carbon projects. The tariff levels range up to 41.3 pence per kWh, even if the electricity is used in the home of the producer.
Payments are index-linked and guaranteed for up to 25 years, and income generated from FITs is currently not subject to income tax if the energy generated is mostly for the producer's own use.
Installations can be mounted on the roof or walls of buildings or placed on the ground, and it is hoped that such schemes will eventually make a significant contribution to the UK's efforts to reduce greenhouse gas emissions.
Grants for solar panels are currently suspended, while the coalition government reviews the current arrangements, but loans of up to £100,000 are avaliable from the Carbon Trust to fund energy-saving projects. Firms can also write off up to 100 percent of the cost of energy-saving plant and machinery against profits using Enhanced Capital Allowances (ECAs).