What was the Feed-in Tariff (FiT) Scheme?
The Feed-In Tariff (FiT) scheme which was introduced on April 1, 2010, was designed by the government to promote the uptake of renewable and low-carbon electricity generation.
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What was the Feed-in Tariff?
The feed-in tariff was a government-backed scheme that was designed to promote the use of renewable and low-carbon electricity sources. The scheme allowed businesses and households to receive cash payments for producing their own electricity using renewable technologies.
The payment process worked by adding a levy on everyone’s energy bills, in an attempt to push people towards creating their own energy.
Although the FiT scheme was closed in 2019 to all new applicants, a similar scheme is available called the Smart Export Guarantee.
What was the purpose of FiT?
The purpose of FiT is to support the development of renewable energies by providing money to businesses and households who invest in renewable technologies, in addition to reducing fossil fuel reliance and carbon-heavy fuel use.
How did the Feed-in Tariff work?
The feed-in tariff worked by encouraging businesses and homeowners to invest in renewable or low-carbon energy-generating technology. Beneficiaries of the feed-in tariff are those who have had renewable technologies installed in their home or business. The energy generated is sold back to the grid which is used as payment to those who qualify for the scheme.
Who was eligible for the Feed-in Tariff?
Both businesses and households were eligible for the feed-in tariff if they had installed one of the following types of renewable energy technologies:
✔ Solar panels
✔ Wind
✔ Micro combined heat and power
✔ Hydro
How much could businesses earn from the Feed-in Tariff?
The amount you earn on your feed-in tariff is dependent on several factors, including:
The type of renewable technology you have installed: Solar, wind, micro combined heat and power were all eligible technologies. The amount generated differs between each.
The size of your system: The higher capacity installations unsurprisingly generate more electricity and therefore more money could be earned.
Your location: Wind and solar-powered energy means that, depending on your location, you’ll receive differing amounts from others in the scheme.
However, according to the Energy Saving Trust, it is estimated that an average household or small business could earn up to £150 per year as well as having a lower electricity tariff.
How long do Feed-in Tariff payments last?
The payments for feed-in tariffs can last up to 20 years. The rates on your FiT are dependent on the technology you have had installed and when you had it installed. The rates of your tariff change every three months for most technology types.
Having a smart meter will mean your exported electricity earnings will be based on how much energy you send to the National Grid rather than an estimated price. There are limits on how much you can earn, as there are deployment caps that put a ceiling on the amount that users can earn.
Who looks after the FiT scheme?
Ofgem, the Office of Gas and Electricity Markets in the UK are responsible for the feed-in tariff. Payments for the feed-in tariff are made by your energy supplier; if you have a query about your FiT payment you should get in touch with Ofgem, where you will be able to find the list of FiT licensees and contact details.
Can I sell my Feed-in Tariff?
Yes! Companies will now offer to buy your FiT in exchange, however doing this can make selling your property difficult in the future. It would always be our advice to look into any difficulties that could occur before you sell your FiT.
Timeline of the UK’s Feed-in Tariff scheme
2010: The feed-in tariff scheme is launched in the UK
2012: The scheme is expanded to include more renewable energy technologies, including biomass and combined heating and power.
2013: The feed-in tariff scheme is degressive, meaning that the rate of payment is reduced over time.
2015: The feed-in tariff scheme is further regressed and the maximum installing size is reduced
2019: The feed-in tariff scheme closes to new applicants
FAQs on the Feed-in Tariff
How long will it take to receive an FiT payment?
Your tariff period would typically be 3 months, and your income during this period will be reflected in the following quarter’s payment.
How do I work out my FiT payments?
The generation tariff, which is the first part of your feed-in tariff payment, is based on how much energy your renewable technology has generated. The second is worked out by your export rate, which is the amount of electricity you export to the grid per unit of time.
FiT payments = (generation rate) x (export rate) x (tariff)
The tariff is the price per kWh that you receive for the electricity you generate and export. The tariff is different for each type of renewable energy source as well as being dependent on size.
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We’ve answered many questions about our services and switching your business gas and electricity on our business energy FAQs page and written many other guides on business energy.
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Business energy contract due to renew? Call us on 0800 9777 000 or fill in our energy quote form to see how much you could save…
