Feed-in tariffs are payments made to homeowners and businesses for the renewable electricity they generate.
The Feed-in Tariff (FiT), introduced on 1st April 2010, was designed to stimulate the solar industry and encourage reductions in the cost of associated technology. And it worked! System costs have more than halved since that date, and so the Feed-in Tariff closed to new applicants on 31st March 2019.
For those receiving FiT payments, the scheme guarantees that owners of small scale solar PV systems will receive up to 4.03p for every kWh of energy generated for the next 20 years. If you read on you will get the fine print. If you haven’t got time this may be all you need to know:
“A return of 9% – better than any bank can provide“ – Ed Miliband, speaking in his former role as Secretary of State for Energy and Climate Change.
Note that new applications to the Feed-in Tariff scheme closed on March 31st 2019.
But for those who installed before that date, these are the initial rates you will receive. You continue to receive that rate for 20 years, adjusted for inflation.
|System Size / Type||Feed-in tariff applying to systems installed from (p/kWh)|
|10 – 50 kWp||4.03|
|50 – 250 kWp||1.69|
|250 – 1000 kWp||1.33|
|Standalone (not wired into building)*||0.05|
|Tariffs for building failing EPC||0.2|
Once you signed up to generate your own energy, you locked in to the Feed-in Tariff rate that applies to your system size, index-linked for 20 years. So for systems of 10kW or less, 3.79p will be paid for every kWh you generate for 20 years – that’s until 2039!
You pay no tax on the money you earn. If you’re a 40% rate tax payer, £1200 earned from solar panels is worth £480 more than the same amount earned from interest on cash deposits. So if you are comparing the income from the tariffs with that from another taxable investment you should look at the ‘post-tax’ income from the taxable investment. Both the generation tariff and the export tariff are index-linked to the Retail Price Index (RPI) so that they rise with inflation. The value of the energy used is also likely to increase as electricity prices rise. This means that your income will increase over the life of the scheme.
Remember your system must have been installed on or before 31st March 2019!
In order to claim the tariffs you need to sign a “home generation” contract with an energy supply company. You should do this as soon as possible. Ring up your electricity company and ask for their “home generation” sign up form. With some electricity companies – for example British Gas – you needed to call them as soon as you know you are installing PV. Whoever your company is, we recommend you ring them as soon as you can, and ask them a) whether you needed to pre-register and b) what their procedure is for signing up. All of the large suppliers offer home generation contracts and in most cases your existing electricity supplier should be able to sign you up. If your electricity provider does not offer the Feed-in Tariff, ring one of the big suppliers instead (e.g. E.on, nPower, SSE). There are also a number of smaller “green” suppliers that are offering FiT payments.
Please note in order for your system to qualify for Feed-in Tariffs, it must be installed by an MCS (Microgeneration Certification Scheme) accredited installer. Spirit Energy is an MCS accredited installer. We will have provided you with a certificate after the installation. You need this in order to sign up.
Now that solar is able to support itself financially without subsidies, the only thing that remains is to ensure people are paid fairly for the excess electricity they export to the grid. This will be covered by the Smart Export Guarantee (in effect from January 1st 2020), which ensures these payments from suppliers. For more details, see our guide to export tariffs.