What are feed-in tariffs?
First introduced in 2010, the feed-in tariff scheme is a government incentive that enables homeowners and businesses to make money by generating their own power and selling any excess back into the National Grid.
Feed-in tariffs (FITs) are payments made to households or businesses who generate their own energy through renewable sources, such as solar or wind produced electricity.
The Feed-in Tariff (FIT) scheme closed for new applications on March 31, 2019.
If your household has an eligible system installed and you have already successfully applied for FITs payments you'll not be affected by the scheme closure.
If your household has installed an eligible system with an MCS certificate dated on or before March 31, 2019, you have until March 31, 2020 to apply to the scheme.
If your household hasn't installed an eligible system on or before March 31 2019, you won't be eligible for FITs payment
Why has the feed-in tariff (FIT) scheme ended?
When the scheme was kicked off in 2010, the government estimated that around 750,000 eligible solar PV installations would take place by 2020.
In reality, the scheme was much more effective than expected and 730,000 eligible systems already had been fitted by 2015 - at least five years sooner than planned. This demand placed a significant strain on the scheme’s budget, which also had to deal with funding cuts of around 65%, as the cost of installing solar PV dropped drastically.
All of these factors combined to bring the closure of the FIT scheme forward by a full year. On July 19, 2018 the government confirmed that the FIT scheme would be wound up on March 31, 2019.
For more information on the scheme closure, check out Ofgem's FAQ page.
What does the FIT closure mean for you?
Nothing will change if you're already signed up to the FIT scheme, and your payments will continue until your solar PV system is 20 years old, or even 25- years old, in some cases.
If you're not already signed up, you'll have missed the deadline of March 31, 2019 and won't be eligible for FIT payments. However, it's worth keeping an eye out for alternative deals, as some energy suppliers, inclding Eon and Octopus Energy, are launching their own payment schemes for homeowners wanting to fit solar panels.
What are the deadlines for FIT support?
If you're installing a domestic system, inlcuding solar PV, wind under 50kW and all micro CHP systems, the following deadlines apply to you.
- March 31, 2019 - By this date you must have had the system commissioned and an MCS certificate issued on or before March 31, 2019.
- March 31, 2020 - You must have applied to your FIT licensee by this date.
Remember, the number of new installations that can receive support under the FIT scheme each month is capped – this is known as a deployment cap.
The deployment cap means there needs to be sufficient space in the final quarterly deployment cap (January to March, 2019) to accommodate an installation’s capacity – if not, it would not be eligible for FITs support. See Ofgem’s Feed-in Tariffs deployment cap reports for the latest information.
Again, if you've not already had an approved system installed, you'll not qualify for payments under the FIT scheme.
How does the feed-in tariff scheme work?
The feed-in tariff scheme pays people who create their own energy, and is designed to encourage people to supply their own energy with renewable and low-carbon sources.
If you’re accepted for a feed-in tariff, you have the opportunity to be paid for the energy you create, as well as for surplus supply you can sell back to the National Grid, via your supplier. The money you earn in the long run could offset a solar panel cost, so it’s definitely worth looking into.
What types of energy qualify for a feed-in tariff?
There are a few different types of energy sources that quality for the tariff. Because you have to create the energy on your own property, these technologies are going to be small. The following types qualify:
- Solar panels
- Wind turbines
- Hydro turbines
- Anaerobic digestion
- Micro-combined heat and power
How to apply for feed-in tariff payments
If you feel you’re in a position to apply for feed-in tariff payments, you should contact your current energy supplier for an assessment - all of the Big Six are required by law to offer a feed-in tariff. Once you have done this, you can start earning money from creating your own energy and contributing to sustainability on a local and national scale.
How quickly can you earn money from feed-in tariffs?
Earning money from the scheme is one of the biggest bonuses from creating your own energy, and the good news is that you can, in most cases, start earning money from as soon as you apply for the tariff.
Feed-in tariffs works in quarters, so once you apply and are confirmed on the plan, you will not actually receive payment until the end of said quarter.
How much could you earn from feed-in tariffs?
What you earn from your tariff is based entirely on the amount of energy you create. Put simply, you earn money by generating energy for yourself through a generation tariff, then again by generating and exporting and surplus energy to the National Grid, via an export tariff. The Energy Saving Trust estimates that each household within the scheme could earn around £150 a year.
If you’re planning to install a photo-voltaic system (solar panel), the cost will be high. If you plan on buying PV panels, the cost would be around £12,000, which would take around 11 years to for payback. Overall profit is a long-term goal, but the short-term goals are the creation of sustainable energy.
What is the generation tariff?
The generation tariff is the amount of money you will receive for creating - or generating - your own energy for your home. The amount can be £4.25 p/kWh for solar panels and £8.39 for wind turbines, although this fee does differ depending on the age of your equipment and your homes EPC rating.
What is the export tariff?
The export tariff is the second part of the scheme, and this relates to the creation of energy that you export to the National Grid. Because this automatically happens, it’s almost like a little bonus. The rate for export energy is £4.91 p/kWh.
What are deployment caps?
The feed-in scheme was created in 2010 by the Government, but by February 2016, they had introduced deployment caps. These are levels for each household within each tariff period (3 months) that cap how much can be earned by creating energy.
What should you consider before installing renewable?
There are a number of things to consider before you install renewable systems. One point of discussion is solar panel price. Because the price is quite high, you need to understand that payoff and profit will only appear across the next 10 years. This also means you need to be sure you will be in your property for that length of time, or more. Solar panels for your home are a great way to make money but they’re better for planning for sustainable living.
If you generate less than 50 kW, you’ll also need to apply to the Microgeneration Certification Scheme (MCS) and ensure your system is fitted by an MCS approved installer.
If you generate between 50 kW and 5MW, these higher amounts mean you’ll need to apply for ROO-FIT accreditation, which involves sending details of your project and FIT eligibility to Ofgem.
Full details on the feed-in tariff scheme application process can be found at the Ofgem website.