Everything You Need To Know About The Closing Feed In Tariff
What is the Feed in Tariff?
The Feed in Tariff (FiT) is a payment made to households who generate their own renewable energy. The scheme launched on 1 April 2010 to promote the uptake of small-scale renewable energy generation.
It comprises of two elements:
- Generation tariff – Solar owners get paid a fixed rate for every unit of electricity that they generate
- Export tariff – Solar owners get an additional payment for excess energy that goes back to the National Grid (assumed at 50%).
You can find the current Feed in Tariff rates on Ofgem’s website.
Once installed, solar owners are eligible for 20 years of these financial benefits. The rates are determined by when you first register to join the FiT scheme, as well as the size and type of installation you have.
The successful scheme has facilitated nearly 1 million solar installations across the UK.
Who pays the Feed in Tariff?
Although this is a government initiative, the tariffs are actually paid by energy suppliers. These costs are often paid for through a levy on consumer’s energy bills.
Electricity companies with over 250,000 customers are obliged to pay feed-in-tariffs. However, some smaller companies also choose to pay the feed-in-tariff.
See Ofgem’s full list of licensees to see if your energy company offers FiT payments. If your energy company doesn’t offer FiT schemes, you can still apply for the FiT through a larger energy company without having to change your energy supplier.
Closing Feed in Tariff
On 19 July 2018, the Department of Business Energy and Industrial Strategy (BIES) published a document stating their intent to close both the generation and export tariff for new applicants on 31st March 2019. There have been no outlines for replacement incentives.
While it was expected that cuts were going to be made to the generation tariff, closure of the export tariff came as a shock to the industry.
The justification for closing this scheme is that the scheme will cost households £1 a year.
Why is this bad?
The proposal to close the export tariff has caused quite a stir among the solar community. This is because people generating clean renewable energy will not be getting paid for excess energy. The energy will be going back to the National Grid for free which will effectively be subsidising the big players in the private energy sector.
This goes against new EU legislation that ‘prosumers’ (households & organisations that both, generate and consume power) should be paid a fair market rate for clean energy that goes back to the electricity network.
Since the Feed in Tariff was introduced, it has seen many cuts. The largest of these cuts were made in 2011 and this caused over a third of solar companies to go out of business.
Closure of the FiT shows a complete lack of support from the government towards environmental and climate commitments. Especially when they are pursuing controversial methods such as nuclear and fracking.
What will this mean for the solar industry?
While this is likely to cause some disruption to the industry, the cost of renewable energy is falling and there is still hope for the future. Green Business Watch estimates that installation costs for solar have reduced by 67% since 2010.
Even though the government aren’t supporting the renewable sector, there is a positive attitude coming from consumers. People are becoming more aware of environmental issues and are starting to consume consciously. In the past, solar was often installed solely for the financial return whereas we are now seeing people installing solar to be part of the green revolution.#
What is being done to stop this?
There has been quite a lot of pushback against these cuts, especially with regards to the closing export tariff. A call for fair payment on exported energy has been made and the industry are waiting for a response.
The Solar Trade Association have published an open letter to Energy Minister, Claire Perry, to urgently confirm the continuation of the export tariff. The letter was signed by over 200 diverse organisations representing a range of companies, academics, city leaders, NGOs, faith groups, youth groups and many more.
How can I help?
You can join over 120,000 people in signing the Greenpeace petition against the attack on the solar industry.
If you would like to register your company’s support, please get in touch with email@example.com. As a member of the Solar Trade Association (STA), NES are helping to collect signatures for fair export payments. STA have collected over 250 signatures to send to Energy Minister, Claire Perry. The
How do I sign up for the Feed in Tariff?
Any installation that is registered before the deadline will be eligible for 20 years of the Feed in Tariff. Therefore, if you have ever considered installing solar, now is a great time to do it.
To qualify for the Feed in Tariff benefits, your installation must be installed by an MCS (Microgeneration Certification Scheme) accredited company. Once your solar panels have been installed, you will receive an MCS certificate from your installer which you can present to your energy supplier to apply.
NES are happy to help you with your FIT application.
Will solar panels still be worth it after the closure of the FIT?
While these feed in tariffs are ending, solar owners will still be able to benefit from over 25 years of reduced bills. On top of this the price of solar technologies is decreasing making the initial start up cost much more affordable. New technologies such as the solar battery mean that homeowners can reduce their reliance on energy companies and protect themselves from rising electricity prices.
So while the closing Feed in Tariff is likely to cause a stir, there is still hope for the solar industry.