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 money could you earn? We answer your key questions about the government’s feed-in tariff scheme.
The feed-in tariff (FIT) pays you for generating renewable electricity. So what's the catch? Find out if you can benefit financially from installing renewable technology at home. Click on the questions below to jump straight to the answer:
- What is the feed-in tariff?
- How much can I earn from the feed-in tariff?
- Who pays the feed-in tariff?
- Have feed-in tariff payments been cut?
- Is the feed-in tariff ending?
- How does the feed-in tariff work?
- Which renewable technologies qualify for the feed-in tariff?
- How do I sign up for the feed-in tariff?
- Can solar water-heating systems get the feed-in tariff?
- Can I take my feed-in tariff if I move home?
- Can I change my feed-in tariff supplier?
- Can I get the feed-in tariff in Northern Ireland?
The feed-in tariff (FIT) scheme offers cash payments to households that produce their own electricity using renewable technologies, such as solar photovoltaic (PV) panels or wind turbines.
The scheme is open to households and community groups in England, Scotland and Wales (but not Northern Ireland). The regular payments are guaranteed by the government. The FIT is paid for through a levy on all consumers' energy bills.feed-in tariff earnings and savings.
Before installing renewable tech, get your home as energy efficient as possible.
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, your home's energy performance certificate must have at least a level D rating (on a scale of A to G, where A is the most energy efficient).
So getting your house as energy efficient as possible makes sense.
Electricity companies with more than 250,000 customers have to pay feed-in tariffs.
These are: British Gas, Eon, Economy Energy, EDF Energy, First Utility, Npower, Ovo Energy, Scottish Power, SSE, The Co-operative Energy, Utilita and Utility Warehouse.
Smaller companies can also choose to pay the feed-in tariff. These include Bristol Energy, Bulb Energy, Ecotricity, Flow Energy, Good Energy, Green Energy UK, iSupply Energy, Robin Hood Energy and Spark Energy.
Once your renewable installation is complete, you can apply to your chosen energy supplier to receive the payments.
The payments are set by Ofgem and the government. This means that you will earn the same amount, regardless of which company pays you.
Yes, the FIT is currently less than an eighth of its original rate. For 1 July to 30 September 2018, the FIT is 3.93p per kWh. Payments decrease every three months.
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 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 payback time of solar panels is now close to the full 25 years of the system’s life
The current rates mean that the number of years it will take to recoup solar installation costs will be a lot longer. The payback time of solar panels is now closer to the full 25 years of the system’s life.
Since 2017, 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.
The feed-in tariff scheme is due to close to new applicants at the end of March 2019. The government has announced plans for a replacement, which it’s currently consulting on. So it’s unlikely you’ll be able to sign up to the new scheme for a few months yet.
The new solar power payment scheme, called the Smart Export Guarantee (SEG), would pay households for excess renewable energy they generate and supply to the grid.
Energy firms would set their own prices for buying electricity from households, and decide the length of contracts.
Unlike the feed-in tariff, payments would be based on the measured amount of electricity you supply to the grid (not estimates) and there will be no payment for generation.
But like the feed-in tariff, energy firms with more than 250,000 customers will have to make the payments, while smaller firms can choose to do so.
You’ll need a smart meter to access SEG payments. The government has suggested that, alternatively, households could install an export meter, costing £300.
There are three savings elements to the feed-in tariff:
- Generation tariff 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 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 You'll be generating a portion of your household electricity yourself, so 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.
- Solar photovoltaic (PV) panels
- Small-scale wind turbines
- Anaerobic digestion
- Micro combined heat and power (micro CHP)
Get your renewable technology installed by a reputable company accredited by the Microgeneration Certification Scheme (MCS). The technology must be MCS-accredited and installed by an MCS qualified professional to qualify for the full FIT payments.
Use 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. Only certificates issued after the installation is complete are valid.
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.
But they 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 guide.
If you move home, the ownership of the renewable technology will usually transfer to the new owners of the property. Therefore they would qualify for the feed-in tariff.
You or they would need to notify the energy company of the change on the date of the move.
You don’t have to use the same electricity company as your feed-in tariff licensee and your domestic electricity supplier. You can change your FIT licensee if you wish.
But the amount you’ll earn will be the same, regardless of the company that pays your FIT.
Find out more about switching the energy supplier that pays your feed-in tariff.
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 2017 to 30 September 2018, the rates for solar PV are (for up to 50kW):
- 1 ROC: 4.27p/kWh
- Export: 4.43p/kWh.
To find out more about NIROC, see the Power NI website.