Feed In Tariff (FIT) Scheme - Rates, Terms & Benefits
NEWS (23/04/2019): FiT is no longer accepting new applicantsIf you were planning on taking advantage of Feed in Tariffs, be aware that the scheme stopped accepting new applicants as of March 2019. That means that no new households will be able to receive FiT’s discounted rates.
Households already receiving FiT will see no change in their benefits.
Feed-in tariffs (FIT) reward domestic energy users who generate renewable energy and who also send it back to the grid. The scheme was brought in by the government, designed to promote renewable and low-carbon electricity generation technologies.
What are the positives?The FIT gives you 3 financial benefits:
- A reduced price on your current energy bill by using the energy you generate
- For all the electricity you generate, you get a monthly payment
- An extra payment for all the electricity you don’t use and send back to the grid
How do I enroll in the feed-in tariff
Be aware that this process is no longer valid as the FiT programme no longer considers new applicants!
If you participate in generating your own electricity, whether it be photovoltaic, wind or other renewable technologies, you will need to apply for a feed-in tariff license to receive payment from the government.
Get your renewable technology installed by a reputable company certified by the Microgeneration Certification Scheme (MCS).
Your accredited installer will provide you with a MCS certificate, which you'll need to present to your chosen energy company to be accepted to receive payment through the FIT.
Once you’ve been approved, a tariff is assigned to your installation based on a number of factors, including, but not limited to, your technology, total capacity installed and when the installation was completed.
Your tariff is determined based on meter readings taken from compliant metering and set by the department for business energy and industrial strategy (BEIS).
Renewable Heat Incentive
The RHI works in a similar way to feed-in tariffs, powering your heating system through a renewable source.
Although it is not as popular as generating renewable electricity, 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 months from the date it was installed to apply for the scheme. Before applying, first check that your product is viable for the scheme on the product eligibility list.
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, including changes to your heating system, meters, criteria information and your biomass or stove boiler.
During the scheme, an audit can be taken place by Ofgem to make sure you are complying to these rules and that all systems are up to date.
|Description||Total installed capacity (kw)||Tariff per/kWh|
|Standard Solar photovoltaic receiving the higher rate||0-10
|Standard solar photovoltaic receiving the middle rate||0-10
|Standard solar photovoltaic receiving the lower rate||0-10
|Standard large solar photovoltaic||250-1000
|Stand-alone solar photovoltaic||0-5000||0.23|
|Anaerobic digestion||0-250 250-500 500-5000||4.99 4.72 1.76|
|Combined Heat and Power||0-2||13.95|
|Hydro||0-100 100-500 500-2000 2000-5000||7.78 6.24 6.24 4.54|
|Wind||0-50 50-100 100-1500 1500-5000||8.26 4.88 2.58 0.80|
Feed In Tariff - Qualifying and Renewables
In a nutshell, the feed in tariff pays you for generating your own renewable electricity. Ofgem helped to introduce it in order to promote renewable energy generation in homes.
You’ll get paid by the government through your energy supplier for each kWh of electricity you 'feed back' into the national grid at any time of day. The current FIT rate is 3.93p/kWh. This is a lot lower than what it used to be, previously (before February 2016) you used to get paid 12.33p/kWh. The size of your solar panel system also determines how much you get paid. The larger the system, the more electricity you feed in and therefore the larger the payout. This needs to be weighed against the fact that larger systems get more expensive to buy and install.
The typical amount you can make back through the FIT is roughly £150/year based on a 4kW system and a 4 person household. Any payment you receive is income tax free and guaranteed by the government for 20 years and adjusted for inflation during that time so you can be assured that the amount won’t change.
How do I become eligible?
You’ll need to generate your own electricity from a renewable source or you can go the route of having multiple renewable energy sources. Solar panels are the most common way of generating electricity for the FIT but you can also do it by other methods:
- Solar panels/Solar roof tiles (TIC. max 5MW)
- Wind turbines (TIC max 5MW)
- Hydropower (only an option if you have a stream on your property, TIC max 5MW)
- Mico-combined heat and power (TIC of 2kW or less)
- Anaerobic digesters (TIC of 5MW or less)
What is TIC?TIC stands for Total Installed Capacity 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.
Is it worth it?
Spoiler alert, it will take a while to get your money back on your investment. About 21 years.
The government slashed prices on what they pay you for each kWh you feed into the network. We’ve calculated how long it would take for you to get your money back on a typical solar panel instaltion (cost, £6,500 on a 4kW solar panel installation), this includes the cost of buying the panels and installation. There’s no cost of signing up for the FIT.
Here’s the maths:
- You’ll feed in 3817 kWh/year.
- The Government (through your supplier) will pay you £150/year.
- You’ll save £160/year on your electricity bill.
- Total earnings from FIT plus saving on your electricity is £310/year.
So how long would it take you to pay off your initial outlay in solar panels? This is assuming that you don’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|
To be eligible for the Feed in tariff you need to:
- Have solar panels (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 FIT tariff)
- Sign up for the FIT through your energy provider.
Buying solar panels: Government Grants
It’s good to note that the government no longer offer grants for buying solar panels, you’ll have to make this initial investment yourself.
What’s the cost of installing solar panels?
Renewable energy typically has a high initial cost of installation. A typical solar set up would set you back £5,000-£8,000 for a typical 4kWh 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 sqft, this is based on the general rule of 100 sqft for every 1kW of solar panels.
If you want to max out your feed in tariff and install a 5 MW (5000 kW) system it will set you back about £5,000,000 and you’ll need about 12,5 acres of land but 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:
- You’ll feed in 4,771,250kWh/year.
- The Government (through your supplier) will pay you £9,065/year.
- You won’t have to pay anything on your electricity bill.
- Total earnings from FIT plus saving on your electricity is £9,912/year.
- You’d take 504 years to break even.
How does the weather affect solar panels?
We’ve taken into account our typical British weather in our calculations based on typical cloud cover in a year. Did you know that even in thick cloud cover, solar panels will continue to generate electricity. On a grey day, solar panels will be operating at about 10-25% capacity when compared to a sunny day. This all depends on your solar panels, as some are specifically designed to work better on cloudy days.
Solar panels also work, abeit at a reduced amount, when covered with snow but they will be operating with a very limited output as not much light can pass through snow. So it's always best to clean any snow or debris off your solar panels so you can generate as much electricity as possible.
How will I be paid?
You’ll be paid for the electricity you feed into the grid by the FIT supplier of your choice NOT by the government directly. You’ll need to install a FIT meter that measures how much electricity you feed into the grid and you’ll have to submit readings or have someone come round and read your meter. You’ll be paid after you’ve submitted your meter readings. Some suppliers take longer to pay you than others so it’s good to shop around.
Rates are set by the government so unless your supplier wants to offer you more than the government rate you’ll find no variation in price. The energy companies are obliged to pay the rate set by the government which means they pay you out of their own pocket. The energy companies receive no money from the government or Ofgem for providing this service.
Check out a full list of FIT suppliers here as well as what to look for when choosing them.
Renewable energy technologies not eligible for the FITThere are some options that will NOT qualify for the feed in tariff mostly because they generate heat for your house, cutting your energy bills but do not generate electricity. They are:
- Solar water heating
- Solar air conditioning
- Solar ovens
- Tesla powerwall (not connected to renewable energy generators)