The Feed-in Tariff (FIT) scheme is a government programme designed to promote the uptake of a range of small-scale renewable and low-carbon electricity generation technologies.
FITs were introduced on 1 April 2010 and replaced UK government grants as the main financial incentive to encourage uptake of renewable electricity-generating technologies. The tariffs were introduced by the Government to help increase the level of renewable energy in the UK towards the legally binding target of 15% of total energy from renewables by 2020 (up from under 2% in 2009). The UK Government’s Department for Energy and Climate Change (DECC) makes the key decisions on FITs in terms of government policy. The energy regulator Ofgem administers the scheme.
Your energy supplier will make the FITs payments to you. The large energy suppliers are required by law to provide them; smaller suppliers are not, but many have opted to offer them anyway. Applications can usually be made through your current electricity supplier but are not linked to your current purchase contract. You do not need to use the same supplier and you can switch your electricity tariff in line with your current contract in the future. All suppliers offer the same payments and you would therefore expect to keep the FIT scheme with the same supplier for the duration of the payments (20 years).
Once you are receiving FIT payments, the rate you receive will increase in line with inflation in accordance with the Retail Price Index (RPI). There are two aspects to the scheme;
Generation Tariff – this is paid for every unit of electricity produced, irrespective of whether you use it or export it back to the grid. The tariff level is determined by the size of the system, the larger the system the lower the tariff. This reflects the economies of scale achieved by installing the biggest system you can fit or afford within your budget.
Export Tariff – any electricity sent back to the grid receives an additional payment on top of the generation tariff.
In addition to the two above payments, any electricity you consume that has been generated by the PV system is free of charge.