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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FAQs

I rent my property. If my landlord installs an electricity generating technology, who would receive the Feed-in-Tariff?
It will be up to landlords and tenants of the property to come to an arrangement about the receipt of payments and on-site electricity use benefits.
What's the Generation Tariff?
You earn a fixed income for every kilowatt hour of electricity you generate and use in your property.
What's the Export Tariff?
You earn an additional fixed income for every kilowatt hour of electricity you generate and sell back to the grid.
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.
What are the benefits of feed-in tariffs?
The feed-in tariff provides three key benefits for anyone installing microgeneration. These benefits include:
  • Guaranteed premium payment for all electricity produced.
  • Guaranteed price for any electricity exported onto the electricity network. This will be deemed based on the amount electricity generated.
  • Onsite usage of generated electricity, therefore reducing the amount purchased from an electricity supplier.
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