What are Feed-in Tariffs?

Started back in 2010, Feed-in Tariffs (FIT) promote renewable and low carbon electrical supply take-up. The usual way an energy company works with a customer is to supply power and then bill the customer accordingly. This scheme turns that traditional supplier-customer relationship on its head. It offers to pay consumers for providing power to the national grid. You can qualify if you have a renewable set up in your home, such as solar panels or wind turbines.

Using an example of solar panels; throughout the day your home will be receiving power from your set up. Sometimes this will not be enough to meet your demand and so your home will need to take from the national grid. Other times your solar panels may be producing a surplus of energy, meaning you have more than you need. During these times you can ‘Feed-in’ the extra power to the national grid. The total amount of excess energy gets recorded. This amount is used to calculate quarterly or annual payments from your supplier.

This scheme applies to ‘green’ generators of up to 5MW output (Some methods allow more). It includes payments for energy created using solar, panels, wind and hydro turbines, anaerobic digestion and micro-generation. To qualify for payments, your installation must be fully licensed and you must make sure you meet all relevant criteria.  With the FIT scheme, a non-negotiable rate is paid to the account holder. The average annual benefit is currently around £150 per household.

How do I sign up?

On 1st April 2019 the FIT scheme closed to new applicants. Extensions to this have been available but this particular scheme is at the end of the line.

Although the FIT scheme is no longer open to new sign-ups, other options do exist. The Smart Export Guarantee (SEG) is the direct successor to the FIT scheme and has already begun rolling out.  The new SEG scheme aims to take advantage of Smart Meter technology. The same installations that qualified for the FIT scheme will be eligible for the SEG. The new scheme does allow you to shop around for a better price per KWh. As take up increases, it is likely that competition will cause better prices to become available. However, you must have a Smart Meter installed to be eligible.

What if I am already on the FIT scheme?

If you are currently part of the FIT scheme then your current contract stands. These were usually termed over 20 or 25 years. This means that if you signed up in 2010, you will continue to receive relevant payments until at least 2030.

If you are considering looking into switching to a SEG scheme, you will most likely find staying put on the FIT a better option. The FIT will pay out a set amount based on the total electricity your installation produces. The most common percentages are  50% or 75% of your total output. The important bit here is that you don’t actually need to supply anything to the national grid to qualify for payment. It could be 0KWh and you will still receive your contracted amount. With SEG, your Smart Meter will log exactly how much of your excess power feeds into the grid. This is likely to be a much lower payment than you are currently getting with your FIT.

Are similar schemes likely in the future?

Yes. Current Carbon Emission targets are very ambitious and may be difficult to reach without drastic action. In future elections the green issue is likely to become more and more prominent. Further reaching emission targets are likely to stem from political wrangling. This means that such schemes will become ever more important.

As initial installation costs can be relatively high, incentives around profiting from energy feed-in help the take up. Long contracts and promises of payments well into the future, help to alleviate some of the doubts people have.

Alongside the SEG, Electric Vehicle Tariffs are starting to appear. EVTs will allow for on and off-peak rates when charging your vehicle. This could make it cheaper to charge overnight, for example. It will also encourage people to charge when the national grid is not as highly loaded. You can also sell excess battery power, although this is unlikely to be lucrative.

Concerns exist around national grid capacity. The mass introduction of electric vehicles is a challenge which brings unique needs. To meet that need, harnessing power from any ‘green’ source is preferable to building more ‘dirty’ power plants. Although current costs of installation may be off-putting for many, these costs are likely to reduce drastically in the future. When that happens, these schemes are likely to become much more mainstream, with more competitive rates available. 

Our objective is simple, to provide you with the information to help give you confidence when switching to a new energy supplier.

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