How does the Feed-in-Tariff work?

The Feed-in Tariffs (FITs) scheme was introduced on 1 April 2010 into the UK, under powers in the Energy Act 2008. The Department of Energy and Climate Change (DECC) has introduced the FIT scheme to encourage small scale power users, i.e. you at home – to generate electricity using microgeneration technologies such as solar PV panels.

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There are three components to the scheme:

  1. You are paid for every unit of electricity you generate, whether you use it or not. The rate at which you are paid is known as the Generation Tariff.
  2. You are paid for every unit of generated electricity that you don’t use, which is then exported to the Grid. The rate at which you are paid for this is the Export Tariff. This is currently set at 4.64 p/kWh.
  3. You won’t have to pay for electricity that you generate and use yourself. Any electricity that you need to sue from the Grid will be imported automatically and you will be charged for this however overall you will still be making a saving.

Generation tariff rates (how much you are paid per unit of electricity generated) vary depending on the type of technology you are installing and the capacity of the installation.

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FITs Step by Step

The scheme is administered by Ofgem, the U.K.’s energy regulator. Large energy companies must be FIT suppliers under law, however small companies are not obliged so it is best to double check with your provider.

The technologies included in FIT are:

  • Solar PV
  • Wind turbines
  • Hydroelectricity (inc. some small tidal projects)
  • Anaerobic digesters
  • Micro combined heat and power (CHP)

1)  You choose your technology (why not use our free assessment tool?) and get it installed. Your installer needs to be MCS accredited and use MCS accredited products if the installation is not hydroelectricity or anaerobic digestion and is below 50 kW, as with the majority of installations.

2)  You then need to let your FIT supplier know that you’d like to apply to the FIT scheme and send in your completed application form, the MCS certificate your installer will give you and your EPC if you are applying for the higher tariff for solar PV. You can apply for a higher tariff if your property is rated as Band D or above on your EPC. You will need to have had your EPC assessment before commissioning your installation.

3)  Your FIT supplier will confirm that you have qualified or the scheme and the details of your FIT agreement.

4)  If your application for FIT payments is approved, your FIT payments will be dated from when your energy supplier or Ofgem receives your paperwork. This means that the sooner you send off you application, the more you will be paid. You can find out in advance what information you will need so that you can send off your application as soon as possible.

5)  Your FIT supplier pays you according to your Generation Tariff per unit of electricity you generate. The value of the tariff is set when you start getting paid and increases with inflation throughout your payment period.

6) Your supplier also pays you according to the Export Tariff, which is 4.64p/kWh for all technologies currently. You are paid per unit of electricity you generate but don’t use and export to the Grid. The scheme does not currently measure how much electricity you export, but it is assumed to be 50-75% of what you generate, varying according to your usage.

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Will I need a special meter to be able to claim FIT payments?
Generation must be metered and Feed-In Tariff payments are made to generators on the basis of metered generation. This means that you will need a generation meter, as your meter will need to be able to measure your electricity generation. DECC has announced that for now, the amount of exported electricity used in the calculation of payment of export tariffs can be deemed (estimated), subject to the following:
  • These arrangements will only apply until the finalising of specifications for smart meters;
  • These arrangements do not apply if export meters exist already, or are provided at the generator's expense
Why are they called 'Feed-In' Tariffs?
This sort of tariff was first introduced in Germany in the 1990s and it applied only to power which was 'fed in' to the electricity grid, hence the name. The tariffs in the UK apply to all the electricity the system produces, whether it is used on site or fed back in to the grid, so the name is actually a misnomer (they are really 'production tariffs').
What is renewable electricity?
It is power produced from a sustainable source such as solar, wind, or biomass. Electricity from fossil fuels like coal, oil and gas or from nuclear stations is not renewable.
I have already received a grant; will I still be eligible for feed-in tariffs?
Feed-in tariffs are open to all householders regardless of whether they have received a grant or not. The only consideration is whether or not you are already registered for ROCs. If this is the case, you will receive a different tariff rate as explained above.
I have already installed a system; will I still be able to receive FITs?
Feed-in tariffs are open to all renewable generators <5MWe. Different tariff rates apply depending on type of technology and whether the system has already been registered for government support:
  • Systems installed between 15th July 2009 and 01st April 2010 will be eligible to receive FITs. All customers installing during this period must be registered under Renewable Obligation. As a registered generator customers will be able to receive Renewable Obligation Certificates (ROC) payments for any electricity generated during his period. Come 1st April 2010 customers registered during the interim period will be automatically transferred over to the feed-in tariff and the FIT applied for generation from this point forward. Please note that customers registered for ROCs during the interim period will receive a 6 month reduction in the lifetime support of the FITs.
  • Systems installed after April 2010 Customer's installations will be registered by an accredited body in order to qualify for feed-in tariffs. Customers must then approach their supplier to begin receiving FIT payments as per the table above.
  • Systems installed before 15th July 2009 Systems installed and registered for ROCs before 15th July 2009 (date of consultation launch) will still be able to receive FITs however they will receive a lower FIT rate at 9p/kWh, regardless of technology.
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