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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What happens to the Feed-In Tariff payments if I move home?
Ownership of the technology is linked to the site and, therefore, in the case where building or home ownership changes, the ownership of the technology would also transfer to the new owner and so would the Feed-In Tariff payments. .
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.
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').
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