What is a Feed in Tariff?
Feed in Tariffs (FiTs) is a Government backed incentive scheme that was introduced in the UK in April 2010 and provides financial payments for green electricity that is produced using renewable energy sources. It is part of the Clean Energy Cashback Scheme introduced by the Government to address the UK’s 2020 renewable energy targets.
The Feed-In Tariff will benefit you in three different ways:
- A payment for all the electricity you produce, even if you use it yourself – the Generation Tariff.
- By generating electricity yourself to power your home appliances you do not have to buy all of your electricity from an energy supplier.
- The less electricity you use, the more money you’ll make by exporting the generated energy to the power grid – the Export Tariff.
Look at our calculator to see what your possible return could be.
The Generation Tariff is a payment made to you for each kWh of electricity you generate, whether you use it yourself or if you export it back onto the electricity grid. It is paid by the energy supplier and the rate fluctuates with inflation. The rate changes each year for new entrants, but once you’ve joined the scheme you will continue to receive the same fixed tariff, index-linked to the RPI (Retail Prices Index) for 25 years.
The Export Tariff is an additional payment and is available for every kWh of surplus electricity that you generate and feed back into the electricity grid, which in turn is sold to a utility and energy company who can deliver your surplus electricity to other customers.
Payment for the Export Tariff is received on top of the Generation Tariff fee. It has been designed as an extra incentive to encourage people that they will still receive money for any surplus electricity they generate.
Who do I receive the payments from?
The money you receive for both the Generation and Export Tariff is actually paid by the energy suppliers, and not the Government. The suppliers pass on the cost of the Feed-In Tariff to their electricity customers, essentially making traditional energy consumers pay for your self-generated electricity.
All the costs are spread equally across all the energy companies but there is the option for smaller suppliers to reject tariff customers.