Under the government’s feed-in tariff (FIT) scheme, you’ll be paid for every unit of electricity you generate, whether you use it or not.
Since the scheme was introduced in 2010 it’s encouraged thousands of UK homeowners to install PV panels. And as well as securing strong financial returns through the tariff, you’ll also enjoy lower energy bills, protect your home from rising fuel prices and lower your impact on the environment. It all makes solar PV the ultimate feel-good investment.
How it works
The feed-in tariff is guaranteed by the government for 20 years. Payments are tax free (as long as you live in the property rather than rent it out) and will also increase in line with inflation.
If you have a solar PV system installed at home, you’ll benefit in three ways:
You’ll get paid for all the electricity you produce
This is called the generation tariff. Your electricity supplier will pay you the current FIT rates for every unit of electricity your system generates, whether you use it in your home or not. Currently the rate for small home installations (below 4 kWp) is 15.44p for every unit (or kWh) you generate.
You’ll get extra payment for the electricity you don’t use
Also known as the export tariff. You probably won’t use all the energy you generate, so what’s left over will be exported into the grid. Your electricity provider will pay you an extra 4.5p for every unit. Most suppliers can’t meter this, so they assume you’ll use half the units you produce and pay you for the rest.
You’ll reduce your energy bills
Electricity generated by your solar panels will feed directly into your house, so it will power any appliances you’re using during daylight hours. As electricity prices continue to rise, this is a huge benefit for our customers. Lots of our customers save more by changing small habits, such as using the washing machine and dishwasher during the day instead of the evening.
Generation Tariff + Export Tariff + Bill Savings = Annual Benefit
A well-designed 2.88kWp system will receive feed-in tariff (generation and export tariff) payments of £435 a year, and save £177 a year on electricity bills. If the system costs £6,254 to install, it gets a return on investment of 9.78%. That’s before you take predicted energy price rises into account.
With returns like that, it’s no surprise many people are choosing to install solar PV systems as an alternative to investing their money with a bank or building society.
To claim the tariff, your system needs to meet a few simple criteria:
- Your installer must be accredited with the Microgeneration Certification Scheme (MCS).
- Your panels must also be MCS approved, and must be new – second-hand or reconditioned equipment isn’t eligible.
- Your system size must be less than 4kWp to qualify for the highest tariff rate. Most domestic systems are well within this limit.
- Your energy supplier must offer FIT payments. The big six suppliers – British Gas, EDF, E.ON, Npower, ScottishPower or Scottish & Southern Energy – are legally obliged to make payments, and many (though not all) smaller suppliers have opted in to the scheme. You can check yours is on the list here.
- Since 1 April 2012, homes must also meet minimum energy efficiency standards to claim the full tariff. This is explained in more detail below.
Energy performance certificates
- From 1 April 2012, only homes that have an energy performance certificate (EPC) at grade D or above will receive the full feed-in tariff
- EPCs give homeowners a snapshot of how energy efficient their home is. It shows how your home ranks on a chart of seven coloured bands, ranging from A (the most efficient, in dark green) to G (the worst, in red).
- Click here to read more about EPCs
Registering for FITs
Registering for payments is simple. First we’ll add you to the central MCS database, then send you a certificate confirming your system complies with MCS standards. Next, you’ll need to tell your electricity supplier you’d like to register for the FIT and send them a completed application form along with your MCS certificate and the energy performance certificate. Don’t worry, we’ll help with all the paperwork.
Your electricity supplier will check your installation against the MCS database, confirm that the system’s eligible and add you to the Ofgem Central FIT Register. They’ll also let you know when they need you to give meter readings, and tell you when to expect payment.
FIT for the future
The Department of Energy and Climate Change (DECC) published a review of FITs in February 2012. To make the FIT budget go further, the review proposes linking the tariff to the number of systems installed. The more people install over one set period, the greater the tariff reduction for the next.
Future changes to the feed-in tariff
- Future reductions will be set for every three months (November, February, May and August) starting from 1st November 2012
- Depending on uptake the reductions can be delayed for up to six months
- By integrating quarterly reductions DECC hope to offer a smooth reduction over time
- The government have set an average reduction of 3.5% every three months, however this will depend on installed capacity during the three months prior to the announcement
- The announcement will be made two months before any changes are to be made
- The reduction can range up to 28% in extreme circumstances
- There will be separate rates of reductions for 0-10kW, 10-50kW and >50kW (includes standalone) bands
Max deployment in 3-month period (MW)
10 – 50kW
>50kW and stand-alone