Feed-in tariffs (FiTs) make the business case for installing renewable energy for electricity generation more attractive. They were introduced to encourage the use of small scale electricity generation from renewables to help meet the Government's renewable energy generation targets.
(This page last updated August 2012)
How they work
FiTs provide three financial benefits: if you generate your own renewable electricity you are paid for the electricity you produce and the excess exported to the grid, you also don't have to buy as much electricity from a supplier.
A generation tariff pays for every kWh of electricity generated. The level of the tariff depends on the type and size of technology used, and when it was installed. You are "locked into" the tariff level that is current when the equipment is installed for the life of the installation or the life of the tariff (10 - 25 years).
An export tariff pays for any electricity exported to the grid. You can either accept a flat rate or try to negotiate a better rate with your electricity supplier.
What is eligible?
- anaerobic digestion (AD) for biogas used in electricity production
- solar electric photovoltaic (PV)
- small-scale gas-powered combined heat and power (m-CHP).
Who is eligible for FiTs?
Any organisation or community is eligible to apply for a FiT for systems with a capacity up to 5 MW.
Summary of generation tariffs
The tariffs are set at different levels for different technologies, according to costs and how much electricity is expected to be generated. The tariffs are index-linked to inflation - the Retail Price Index (RPI). Tariffs were set to deliver an approximate rate of return of 5-8% for well-sited installations, for each technology.
Since the scheme started, PV costs have fallen more rapidly than expected, and led to Government reviewing the level of PV solar tariffs.
You should consult the Ofgem and DECC FiT pages for the latest information on tariff levels.
I already generate - can I claim a FiT?
The FiT is set up to complement the Renewables Obligation (RO) which is the support mechanism for large scale generation.
If you have an existing microgenerator (up to 50 kW) and have received the RO, you will transfer to FiT. For a larger generator (above 50kW but below 5MW) you will be able to choose between FiT and the RO. In most cases FiTs offer a higher incentive than the RO, and could yield returns of 5-8%, equivalent to a payback period of 10-14 years (though this depends on the specific installation conditions).
Generation systems above 5 MW cannot transfer between schemes.
If you are generating, or considering generating renewable electricity then you may wish to consider the following questions:
- Do you have scope to improve your energy efficiency?
By reducing your energy use you can reduce the size of electricity generation you need.
- Use the most appropriate technology and generation capacity
It is important to use the renewable technology that is most suited to your circumstances. Our advisors will be able to point you towards support.
- FiTs or ROCs?
If your generation capacity is above 50kW but below 5MW, you need to select whether to benefit from a FiT or ROC. When comparing the options you should bear in mind that ROCs can vary with market forces, but FiTs are fixed and index-linked.
- Financing the capital cost
Investing in green technology makes sound business and environmental sense, especially with the easy, affordable and flexible financing scheme brought to you by Carbon Trust Implementation and Siemens Financial Services. Find out more about our Implementation and finance support.
Interest-free loans are still available in Wales and Northern Ireland.
Companies can also apply for Enhanced Capital Allowances (ECAs), enabling them to claim 100% first-year capital allowances on their spending on qualifying plant and machinery. Learn more at https://etl.decc.gov.uk/.
In general, if your installation has received a grant from, or on behalf of, a public authority it will not be eligible for the FiT Scheme until the grant has been paid back. The exceptions to this rule are:
- grants which were awarded before 1 April 2010 relating to eligible installations commissioned before 15 July 2009
- grants made to domestic installations before 1 April 2010 relating to eligible installations commissioned between 15 July 2009 and 31 March 2010.
To apply for the FiT scheme, installations must be located in Great Britain and have an approved meter in place.
However at the very small scale, the amount of exports for the payment of export tariffs (not generation tariffs) will be allowed to be "deemed", for generators of 30kW or less as follows:
- 50% of generation for solar PV
- 75% of generation for hydro installations.
Suppliers are likely to need to pay for the cost of the smart meters under the Government's mandated roll out, due to be completed by the end of 2020. However, if a FiT generator needs a smart meter before this planned roll out, the generator may need to pay.
- Selecting an installer
Microgeneration systems which have a capacity of 50kW or less (excluding anaerobic digestion) are required to obtain the Microgeneration Certification Scheme (MCS) certification or equivalent. This means the installations must be commissioned by a MCS-certified Installer using a MCS-Certified Product or be certified under an equivalent scheme.
More details are given on the MCS website.
Installations with a capacity greater than 50kW but up to and including 5MW (or all anaerobic digestion up to 5MW) need to apply for ROO accreditation. Ofgem's website has further information on how to apply for accreditation.
- Choosing a supplier
Let your chosen supplier know that you plan to receive FiTs. The supplier will register or confirm your details with Ofgem and your installation will be added to the Central FiTs Register. A list of participating suppliers is available on Ofgem's website.
Further sources of information
The Carbon Trust can help you reduce your energy demand and evaluate the best renewable electricity generation technology for your organisation. Find out more about our Implementation and finance support.
Ofgem, who are administering the FiT scheme on behalf of DECC, have published guidance on their website.
More details of the microgeneration scheme are given on the MCS website.
For information on accreditation of installers below 50kW and general information about products and installers, email firstname.lastname@example.org or ring the MCS helpline on 020 7090 1082.
For general enquiries regarding FiT accreditation of installations between 50kW and 5MW please contact email@example.com or call 020 7901 7310.