How does the Feed-In Tariff work?

If you are eligible to receive the Feed-In Tariff you will benefit in three different ways. Not only will you receive a payment for the Generation tariff and the Export tariff, you’ll also reap big savings on your energy bills.

By generating the electricity yourself to power your home appliances you do not have to buy all of your electricity from an energy supplier. And the less electricity you use, the more money you’ll make by exporting the generated energy to the power grid.

Generation Tariffs

The generation tariff is a payment made by the energy supplier for each kWh of electricity your installation generates. This rate fluctuates with inflation and will change each year for new entrants to the scheme (except for the first two years), but once you join you will continue to receive the tariff for 20 years. The payment received depends on the size and type of technology you’re using rather than being a set rate, and solar PV is capable of producing the most profitable energy figures.

Export tariffs

The export tariff is a bonus payment for every kWh of electricity you generate but don’t use and then export to the electricity grid. The payment has a set ‘floor price’ of 4.64p per kWh, which can be opted out of to negotiate a new price with your energy supplier, that you export back and the electricity supplier then delivers the electricity to another customer. The tariff has been designed as an extra incentive to encourage people that they will still receive money for any surplus electricity they generate.

Who do I receive the payments from?

The money you receive for both the Generation and Export tariff DOESN’T come from the government – it is actually paid by the energy suppliers. The suppliers pass on the cost of the Feed-In Tariff to their electricity customers, essentially making traditional energy consumers pay for your self-generated electricity.

All the costs are spread equally across all the energy companies but there is the option for smaller suppliers to reject tariff customers.

Feed-In Tariff Rates Table

As mentioned previously, the rate of the Generation tariff depends on the technology and the size of the system you have installed. This is how the tariff breaks down dependent on the technology and size.

Notes:
[*]: Installations registered in FIT Year 4 1st April 2013 – 31 March 2014. These tariffs are index-linked for inflation. The Energy Regulator Ofgem publishes updated tariff levels.
[**]: This tariff is available only for 30,000 micro-CHP installations, subject to a review when 12,000 units have been installed.
[***]: These terms are defined as follows:

• ‘Retrofit’ means installed on a building which is already occupied
• ‘New Build’ means where installed on a new building before first occupation
• ‘Stand-alone’ means not attached to a building and not wired to provide electricity to an occupied building

Measuring the energy

Because the tariff payments based on the kWh produced and exported, the energy generated needs to be measured. Three different meters need to be installed to read the three energy flows – generation, import and export.

You will already have an import meter which is used to calculate your energy bills. Some of these are capable of measuring export too, but this needs to be investigated. A generation meter will be provided with whichever MCS certified product you choose to have installed.

However, it’s worth remembering that Smart Meters are soon to become universal and will be able to cope will all of your meter reading requirements.

Further Reading

What is the Feed-In Tariff (FIT)?
What is the future of the Feed-In Tariff?
How do I apply for a Feed-In Tariff?