What is a Feed In Tariff?
A feed in tariff, often shortened to FiT, is an incentive scheme designed to encourage the adoption of renewable energy generation at a domestic and community level. Essentially, it's a payment you receive for the electricity you generate from a qualifying low-carbon source, like solar photovoltaic (PV) panels, and crucially, for any surplus electricity you export back to the national grid. Think of it as getting paid for being a micro-generator, contributing to the UK's energy independence and carbon reduction goals.
- Earn money for renewable electricity generated.
- Get paid for surplus power exported to the grid.
- Encourages adoption of solar PV and other renewables.
- Helps offset initial installation costs over time.
The concept behind a feed in tariff is straightforward: by offering a guaranteed rate for the energy you produce, it makes the investment in renewable technology more financially viable. This encourages more people to install systems, increasing the overall supply of green energy. While specific rates and the availability of new applications for older schemes have changed, the principle of earning from your solar remains a significant draw for homeowners looking to reduce their bills and potentially create a new income stream.
Understanding Your Export Payments
The original feed in tariff scheme in the UK was closed to new applicants some time ago. However, the principle of being paid for exported electricity continues through schemes like the Smart Export Guarantee (SEG). The SEG mandates that medium to large energy suppliers must offer a tariff for small-scale generators exporting electricity to the grid. This means that even if you aren't on the original FiT, you can still earn money. The key difference is that under SEG, suppliers set their own export rates, so comparing different providers becomes important to secure the best deal.
How the Feed In Tariff Scheme Works for You
Imagine your roof is silently working for you. When the sun shines, your solar panels generate electricity. Some of this powers your home directly, reducing the amount you need to buy from your energy supplier. Any electricity you don't use immediately is 'exported' back to the grid. This exported electricity is what you get paid for under a feed in tariff or an export tariff like the SEG.
Check your energy supplier's website for their Smart Export Guarantee (SEG) tariff details. Compare the pence per kilowatt-hour (p/kWh) they offer for exported electricity, as this rate varies significantly between providers and can make a real difference to your overall earnings.
Export Tariff Rates and What Affects Them
The value of your feed in tariff or SEG export payment is determined by the 'rate' offered, usually measured in pence per kilowatt-hour (p/kWh). These rates can fluctuate. For the original FiT, rates were fixed for the duration of the contract, offering long-term certainty. For SEG, energy suppliers set their own export rates. These rates are influenced by market conditions, wholesale electricity prices, and the supplier's own business model. Some tariffs might be fixed for a period, while others might track wholesale prices, potentially offering higher returns but with more variability.
The primary benefit of a feed in tariff or export scheme is turning a home into a small power station that earns its keep.
When considering solar, it's wise to look beyond just the generation tariff. The Smart Export Guarantee is specifically for the electricity you export. The total benefit of solar comes from a combination of reduced electricity bills (from self-consumption) and export earnings. Understanding your home's typical electricity usage patterns will help you estimate how much of your generated solar power you're likely to use yourself versus export, and thus, how the export payments contribute to the overall affordability and return on investment.
Making the Most of Your Solar Earnings
To truly benefit from a feed in tariff or an export scheme like the SEG, a bit of savvy planning can go a long way. It’s not just about installing panels; it’s about optimising how you use and get paid for the energy you produce. For example, if your export rate is low, try to shift your high-energy-use appliances, such as washing machines or dishwashers, to run during daylight hours when your solar panels are generating electricity. This increases your home's self-consumption, meaning less electricity is exported but you save more on your incoming energy bills.
Comparing Your Options
If you have solar panels and are looking to get paid for the energy you export, you are likely looking at a Smart Export Guarantee (SEG) tariff. Different energy suppliers offer various SEG tariffs. Some pay a flat rate, others might offer rates that vary throughout the day (e.g., higher rates during peak demand times). It is crucial to compare these SEG tariff prices and terms.
| Consideration | What to Check |
|---|---|
| Export Tariff Rate (p/kWh) | The price per unit of electricity exported. |
| Contract Length | How long the export rate is guaranteed for. |
| Eligibility Criteria | Does your system size qualify? Are there specific meter requirements? |
| Meter Type | Does the tariff require a smart meter? |
| Measurement Method | Is export metered separately, or is it an estimate based on generation? |
If you have a smart meter installed, ensure your energy supplier can access its export readings correctly. Proper metering is vital for accurate payments under export schemes.
By actively comparing different feed in tariff or SEG providers and understanding your own energy consumption, you can ensure you are getting the most value from your investment in solar power, making renewable energy a more affordable and rewarding choice for your household.