Solar: What are Feed-In Tariffs and How Do They Work?

Feed-in tariffs allow households to receive money for any electricity generated by applicable systems, this includes solar PV.

What are Feed-In Tariffs (FIT)?

You will be paid for the electricity that you generate using your solar panels, this will then be released back into the grid.

Generally, there are two separate tariffs:

  1. Generation Tariff: with this option, you will receive payment for every kilowatt-hour of electricity your solar panels generate, even if you use it or send it to the grid.
  2. Export Tariff: here, you will get additional payments for any excess electricity you send to the grid. This can be at a lower rate than the generation tariff.

How Do Feed-In Tariffs Work?

The way FITS work can be broken down into 3 steps:

  1. Meter Installation: it is a requirement for a meter to be installed. This tracks the amount of electricity your solar panels generate, and the amount sent to the grid.
  2. Registration: you should register with an energy supplier that has the FIT scheme on offer and will then monitor electricity generation and exportation.
  3. Payments: regular payments will be made, typically every quarter, from your energy supplier.

How do the Payments Work?

The money from the feed-in tariff will be directly deposited into your bank account. These payments will be in addition to the energy bill savings you make from generating with solar.

Who is responsible for the Feed-in Tariffs Scheme?

Ofgem is responsible for administering the scheme and FIT licensees (energy suppliers) make the payments to you. If you want to ask specific questions about FITS then you should contact your energy supplier. You can find contact details for energy suppliers in our support hub.

What are the Benefits of Feed-In Tariffs?  

With a feed-in tariff, you will begin to see a financial return from the electricity you generate and export as well as a reduction in your energy bills, thanks to the reduced need in buying energy from the grid. You will also be contributing to the reduction of carbon emissions by producing and using renewable energy.

Will it Be Worth It?

If you are thinking about signing up for a feed-in tariff, some factors should be taken into consideration:

  • Current Rates: the current tariff rates for generation and exporting could vary and impact the overall financial benefit.
  • Solar Panels Efficiency: the age and efficiency of your solar system will determine the volume of electricity you can generate.
  • Electricity Time of Use: if you use more electricity during the day, you might benefit more from using the free electricity instead of exporting it back to the grid.
  • Upfront Costs: find out if any extra costs come with registering for the FIT scheme.
  • Think of the Future: be on the lookout for any possible changes to the FIT scheme or rates that may happen in the future and could impact your financial return.

In Summary

Whilst there are major benefits like financial return, reducing energy bills, and environmental improvements, you still may need to weigh up different factors that could impact these.

If you think the feed-in tariff is right for you and want to know more, get in touch with your energy supplier. They can give you all of the information you will need.

If you are at the start of your solar journey, you can click the button below to check your eligibility.

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