A Guide to the Feed-In Tariff

Introduction

There are many ways to save energy and help the environment.

Microgeneration – the generation of heat and power by individuals using zero or low carbon technology is the one way you can really make a difference.

You can become a micro generator by installing solar photovoltaic panels.

The Government promotes the use of low carbon technologies. That’s why the Feed-in-Tariff (FiT) scheme was introduced.

How does it work?

Under the FiT scheme you are paid:

  • For energy you generate and use yourself
  • For energy you generate but do not use. You ‘export’ this electricity to the National Grid.

To make sure that you always have enough energy for your own purposes you will remain connected to the grid so that you can buy (or import), any electricity you need from your supplier in the usual way.

Who pays what?

In working out payments under the scheme there are two separate tariffs:

  • Generation tariff – money you receive for the electricity you generate
  • Export tariff – money you receive for the electricity you generate and do not use, which you export to the National Grid

To calculate these payments you give your electricity company quarterly readings from your ‘Generation Meter’ which is installed with your solar panels. There is no ‘Export Meter’ for a domestic installation so the amount you export is estimated based on a percentage rate that is set by the Government (currently 50%). In short, at current rates you get approximately 4 pence (FiT) for each and every kilowatt you generate and approximately 5 pence (export tariff) for every other kilowatt you produce.

Using your electricity, or exporting it

If you are generating your own electricity there is an incentive for you to use as much of the electricity you are generating as possible, this is because;

  • You are paid a set amount per unit for the electricity you generate, whether you use it or export it
  • If you use the electricity you generate it does not cost you anything
  • If you do not use the electricity you generate you are paid for the electricity you export to the National Grid

But – to buy electricity will cost you more than you make by exporting it.

So it is much better for you financially to use as much electricity you generate as you can rather than import electricity from the grid.