The Feed in Tariff (FIT) is a Government-backed incentive to get homes and business in the UK to install microgeneration technology to help the UK reach its carbon reduction targets. Basically, if you install a renewable energy technology from a renewable or low-carbon source, which are covered by the MCS Scheme, such as solar PV or wind turbines, the government's Feed-In Tariff scheme (FIT) will pay you for what you generate, on top of any electricity savings your chosen alternative energy gives you.
In short, you will be paid for the electricity you generate, even if you use it yourself, and for you will also be paid for any surplus electricity you export to the grid. This is on top of the money you will save on your electricity bill, because you'll be using your own electricity.
The FIT scheme is currently tax free for domestic installations and is index linked which means that the payments will increase in line with inflation. The payments are also guaranteed for 20 years.
How FITs work
6 - If you are eligible to receive FITs you will benefit in three ways:
- Generation tariff - your energy supplier will pay you a set rate for each unit (or kWh) of electricity you generate. Once your system has been registered, the tariff levels are guaranteed for the period of the tariff (20 years) and are index-linked.
- Export tariff - you will get a further payment from your energy supplier for each unit you export back to the electricity grid, so you can sell any electricity you generate but don't use yourself. This rate is the same for all technologies. At some stage smart meters will be installed to measure what you export, but until then it is estimated as being 50% of the electricity you generate.
- Energy bill savings - you will be making savings on your electricity bills , because generating electricity to power your appliances means you don’t have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site.
A typical domestic solar electricity system with an installation size of 4kWp could earn:
- £160 a year from the Generation Tariff
- £85 a year from the Export Tariff
- £377 a year reduction of current electricity bills (based on 13.5p per kwh)
Both the Feed In and Export Tariff are tax free and index linked, so will increase year on year. The savings off of your electricity bill can only increase as the cost of electricity increases year on year.
You will need an extra electricity meter called a Total Generation Meter. This measures the electricity your system is generating. As MCS certificated installers, we will provide this as part of the installation package.
Government review of FITs
The Government will review the current FIT rate every 3-4 months and will reduce the FIT rate based on how much renewable technology has been installed in a given time-frame. This means that anyone installing after a given deadline will receive the reviewed FIT rate but anyone who has already applied for for the FIT scheme before the deadline will get the pre-reviewed rate for the duration of their agreement.
Registering for FITs
Once your chosen installer we will guide you through the process of registering for your FIT payments. The registration involves the following steps:
- Upon completion your installation will be registered on the MCS database and you will be sent a certificate confirming MCS compliance.
- You will be issued with your EPC certificate showing the energy performance of your property.
- Contact your chosen FIT provider and find out how you can register your installation with them. Many have downloadable form on their website.
- Complete the application form including all of the supporting paperwork they require. Without this paperwork, they may reject your application.
- Your supplier will cross-reference your installation with the central MCS database.
- Once registered your supplier will send you a contract to sign and return.
- Your supplier will tell you when you will need to provide meter readings.
- Your supplier will agree with you when they will make FIT payments to you.
- If you want to opt out of the guaranteed export tariff you must tell your supplier - you would only do this if you have a separate Power Purchase Agreement to sell your surplus on a commercial basis.