What is the feed-in tariff?
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What is the feed-in tariff?
How does the feed-in tariff work and how much could you earn? Find out the answers to your key questions about the government’s feed-in tariff scheme.
The feed-in tariff (FIT) pays you for generating renewable energy. So what's the catch? Find out if you can benefit from installing renewable technology - read our expert guide to the feed-in tariff.
What is the feed-in tariff?
The scheme, which launched in April 2010, is open to households and community groups in England, Scotland and Wales (but not Northern Ireland). The regular payments, which are paid for through a levy on all consumers' energy bills, are guaranteed by the government.
Is it true that feed-in tariff payments have been cut?
Yes, the FIT was changed to 4.39p per kWh for new installations after 15 January 2016. The payments will continue to decrease every three months. For 1 July to 30 September 2016, the FIT is 4.32p per kWh.
When it was first launched, the FIT rate for solar PV was very generous: 43.3p per kWh of electricity produced. But owing to its success and the decreasing cost of solar panels, feed-in tariff rates (for new installations only) have since been cut.
The tariffs were more than halved to 12.92p per kWh in August 2012. From 15 January 2016, the solar feed-in tariff was cut by a further 65% to 4.39p per kWh, and has been cut again since.
The 2016 cuts mean the number of years it will take to recoup solar installation costs will be a lot longer and the payback time of solar panels is now closer to the full 25 years of the system’s life.
Feed-in tariff deployment caps limit the number of installations that qualify for FIT. The FIT scheme is suspended in each three-month tariff period where the cap is reached.
How much can I earn from feed-in tariff payments?We've calculated some typical earnings and costs to give you an idea of how much can potentially be made by enrolling on a feed-in tariff. For more details, see feed-in tariff earnings and savings.
But before spending thousands on renewable technology, make sure your home is as energy efficient as possible. To qualify for the highest feed-in tariff, from April 2012 it became mandatory for your home's energy performance certificate to have at least a level D rating (on a scale of A to G, A is the most energy efficient). So getting your house as energy efficient as possible makes sense.
You also need to make sure the renewable technology you choose is right for your home - the Energy Saving Trust's home energy generation tool is a good first port of call to decide which, if any, are suitable.
How does the feed-in tariff work?
There are three savings elements to the feed-in tariff.
- Generation tariff (G) is a fixed rate payable to households for the total amount of electricity generated, calculated per unit. The rate you'll receive is determined by when you first registered to join the FIT scheme and the type and size of installation.
- Export tariff (E) is payable on the units of electricity you export back to the national grid because you haven't used them in your own property. In the case of most small-scale technologies - or unless you already have a two-way smart meter installed - the level of electricity exported is currently 'deemed' by assuming you export 50% of the electricity you generate.
- Savings on your electricity bills (S) because you'll be generating a portion of your household electricity yourself, your energy bills will be lower.
The tariff is payable for up to 20 years, and the tax-free payments are usually paid each quarter. For specific rates, see feed-in tariff savings and earnings.
Which renewable technologies are eligible?
- Solar photovoltaic (PV) panels
- Small-scale wind turbines
- Anaerobic digestion
- Micro combined heat and power (micro CHP)
I already have a solar panel or wind turbine. Can I join a feed-in tariff scheme?
Yes, but it depends on when and how your renewable technology was installed.
You'll qualify for full feed-in tariff payments if your solar panel or wind turbine was installed between 15 July 2009 and 31 March 2010 and you transferred your Renewables Obligation Certificate (ROC) to the feed-in tariff before 1 April 2010. If you didn't, or didn't apply for a ROC in the first place, you won't be eligible for feed-in tariff payments.
If your renewable technology was installed after 1 April 2010, it must be accredited by the Microgeneration Certification Scheme (MCS) and have been installed by a MCS qualified professional for you to be eligible for full payments.
How do I enrol in the feed-in tariff?
Get your renewable technology installed by a reputable company accredited by the Microgeneration Certification Scheme. Try Which? Trusted Traders for recommended, renewable installation firms in your area. Don't take the first quote - shop around and compare several quotes to ensure you're getting a good deal.
Your installer will provide you with a MCS certificate, which you'll need to present to your chosen energy company to get signed up to a FIT.
Your energy supplier will then arrange the set up of the feed-in tariff - ask how often you'll need to take meter readings and when you'll receive payments. An additional electricity meter may need to be installed.
What about solar water heating panel systems?
Heat-generating technologies such as solar water heating systems - as well as air and ground source heat pumps, air source heat pumps and wood heating systems - are eligible for payments under a separate scheme called the Renewable Heat Incentive (RHI).
The RHI works in a similar way to feed-in tariffs, guaranteeing regular tariff payments for seven years based on the amount of renewable energy generated. You can find out more in our Renewable Heat Incentive Q&A.
What happens if I move home?
If you move home, in most cases the ownership of the renewable technology will transfer to the new owners of the property. You or they would need to notify the energy company of the change on moving in.
What about Northern Ireland?
FIT only applies to England, Scotland and Wales. In Northern Ireland, households wanting to install solar PV panels can claim NIROC (Northern Ireland Renewable Obligation Certificates). In addition, if your solar PV installation is registered with Northern Ireland Electricity (NIE), you will get an export meter and could get paid for every surplus unit of electricity you produce and do not use (export tariff).
The rate of NIROC and export tariff is reviewed annually. For 1 October 2015 to 30 September 2016, the rates for solar PV are (for up to 50kW):
- 1 ROC: 3.97p/kWh
- Export: 4.10p/kWh.
To find out more about NIROC, see the Power NI website.