Feed In Tariff scheme: Generate your own Electricity
The Feed in Tariff was a clean energy initiative that paid households to generate their own electricity. Read on to find out how feed in tariffs worked, who was eligible, and the costs of installing your own clean energy-generating technology.
Is the Feed in Tariff still available?The FIT scheme has been replaced by the Smart Export Guarantee. If you were planning on taking advantage of the Feed in Tariff, please be aware that the scheme stopped accepting new applicants as of March 2019. This means that no new households will be able to receive the Feed in Tariff’s discounted rates.
What is the Feed in Tariff?
Feed in tariffs (FIT) rewarded domestic energy users who generated electricity from renewable sources, such as solar panels or wind turbines and ’fed’ it back to the National Grid. The scheme was brought in by the government, designed to promote renewable and low-carbon energy technologies.
The feed in tariff offered 3 main financial benefits:
- A reduced rate on your energy bill by using the electricity you generate
- Monthly payment for all the electricity you generate
- Extra payment for all the electricity you don’t use and send back to the grid
How does it work?
Payments on the feed in tariff were guaranteed by the government and raised through a levy on energy bills.
Customers on the feed in tariff were paid by their energy supplier for each kilowatt-hour (kWh) of electricity 'fed back' into the National Grid at any time of day. The most recent feed in tariff rate was 3.93p per kWh.
The size of the user’s solar panel system also determined how much they were paid. The larger the system, the more electricity fed in and, therefore, the larger the payout. The typical amount made back through the feed in tariff was roughly £150 per year, based on a 4kW system and a 4 person household.
I received the feed in tariff on my solar panels - will I still be paid?If you were signed up to receive the feed in tariff before the closing date of March 2019, you will continue to do so for the duration of your agreement.
Who pays the Feed in Tariff?
Customers on the feed in tariff would be paid for the electricity they feed into the grid by their energy supplier of choice, rather than the government directly.
Rates were set by the government, so it was rare to find variations in price. Energy companies were obliged to pay the rate set by the government which means they paid out of their own pocket, receiving no money from the government or Ofgem for providing this service.
Am I eligible?
To qualify, households needed to generate their own electricity from one or more renewable energy sources. Solar panels were the most common way of generating electricity for the feed in tariff, but it could also be done by other methods:
- Wind turbines (TIC max 5MW)
- Hydropower (only an option if you have a stream on your property, TIC max 5MW)
- Micro-combined heat and power (TIC of 2kW or less)
- Anaerobic digesters (TIC of 5MW or less)
What does TIC mean?TIC stands for Total Installed Capacity and is also known as rated capacity, or nominal capacity. TIC is the maximum sustained output of your renewable energy installation. You probably won't achieve these figures in your home as these figures are generated from optimal conditions in the lab.
Renewable energy technologies not eligible for the Feed in Tariff
There are some renewable energy technologies that will NOT qualify for the feed in tariff, mostly because they generate heat, but not electricity. These are:
- Solar water heating
- Solar ovens
- Tesla Powerwall (not connected to renewable energy generators)
An alternative option for these is the Renewable Heat Incentive (RHI). With the RHI you receive regular tariff payments for a seven-year period on the amount of renewable energy generated.
You can generate the energy via many renewable sources, including solar thermal panels, air-source heat pumps, ground-source heat pumps and biomass.
If you already have one of these sources connected to your home, you have 12 monthsfrom the date it was installed to apply for the scheme.
During the scheme, you have responsibilities to keep your property and heating system in order, so you must comply with certain conditions to continue receiving payments. These can include changes to your heating system, meters, criteria information and your biomass or stove boiler.
How do I claim my feed in tariff?
Be aware that this process is no longer valid as the feed in tariff programme is longer accepting new applicants
If you wished to participate by generating your own electricity, whether it be photovoltaic, wind or other renewable technologies, you needed to first apply for a feed in tariff license to receive payment from the government.
To be accepted to receive payment through the feed in tariff, renewable technology must have been installed by a reputable company certified by the Microgeneration Certification Scheme (MCS).
Once you’d been approved, a tariff was assigned to your installation based on a number of factors, including - though not limited to - your technology, total capacity installed and when the installation was completed.
Tariffs were determined based on meter readings taken from compliant metering and set by the Department for Business Energy and Industrial Strategy (BEIS).
How much could I earn?
Spoiler alert, it would have taken a while to get your money back on your investment. We’ve calculated how long it would take for you to make your money back on a typical solar panel installation (£6,500 for a 4kW solar panel installation). This includes the cost of buying the panels and installation. There’s no cost for signing up for the feed in tariff.
Here’s the maths:
- Feed in 3,817 kWh per year.
- Government (through your energy supplier) would pay £150 per year.
- You’d save £160 per year on your electricity bill.
- Total earnings from feed in tariff plus saving on your electricity was £310 per year.
So how long would it take you to pay off your initial outlay in solar panels? This is assuming that you didn’t need to pay anything to service them after installation - typically servicing is minimal for solar panels and they are reliable. Take a look at the table below.
|Time||Total Savings and Earnings||Profit/Loss|
*Calculations based on a standard British Gas pay as you go tariff.[custom_block:45]
To be eligible for the feed in tariff you needed:
- Solar panels installed (or another way of generating renewable electricity)
- An Energy Performance Certificate in the last 10 years (rating D or above to qualify for the highest rate feed in tariff)
- To be signed up with an energy supplier that offered its own feed in tariff
How much does it cost to install solar panels?
Renewable energy typically has a high initial cost of installation. A typical solar set up will set you back £5,000-£8,000 for a 4kW system, which is large enough to cover the roof of a medium sized detached house.
You will also need to consider where to put it. A south facing roof with no overhanging trees is ideal, north facing or shaded areas should be avoided. The roof space you need would be roughly 400 square feet, this is based on the general rule of 100 square feet for each 1kW of solar panels.
How long do solar panels last?The average life expectancy of solar panels is about 25-30 years before decommissioning. While this doesn’t necessarily mean they will stop producing electricity entirely by this point, their productivity will have declined significantly.
If you wanted to max-out your feed in tariff and install a 5 MW (5000 kW) system it would set you back about £5,000,000 and you’d need about 12.5 acres of land, though you’d be making a lot less from the feed in tariff rate - that’s the same as the output of the solar panels on the new Apple campus in Silicon Valley! This breaks down as:
- Feed in 4,771,250 kWh per year.
- Government (through your supplier) pays you £9,065 per year.
- You won’t have to pay anything on your electricity bill.
- Total earnings from feed in tariff plus savings on your electricity are £9,912 per year.
- 504 years to break even!
What is replacing the Feed in Tariff?
Although not a direct replacement for the feed in tariff, the Smart Export Guarantee (SEG) is a new scheme that pays households for the excess renewable electricity they feed back into the National Grid.
The Smart Export Guarantee differs from the feed in tariff somewhat. While the government set feed in tariff rates, energy suppliers can name their own prices for SEG tariffs. Most SEG tariffs also require a smart meter to be installed.
To learn more, visit our Smart Export Guarantee guide.