Feed-in Tariff applications: past and present

The Feed-in Tariff (FiT) scheme, once a cornerstone of the UK's renewable energy landscape, closed to new applications on 31 March 2019. While new solar panel installations can no longer apply for FiT, existing contracts continue to receive payments. A new scheme, the Smart Export Guarantee (SEG), has taken its place, offering a fresh approach for homeowners to gain more control over their energy generation and unlock financial advantages from their home energy systems.

If you are generating your own electricity at home, understanding how to get paid for it is key to maximising your savings and earnings. Fuse Energy offers competitive export tariffs and smart energy management tools to help you make the most of your renewable energy. Click here to see how you could benefit.

What was the Feed-in Tariff (FIT) scheme?

The Feed-in Tariff (FiT) scheme was a UK government initiative launched in April 2010 to encourage the adoption of small-scale renewable and low-carbon electricity generation technologies, such as solar panels and wind turbines, in homes across Great Britain. It aimed to make renewable energy generation more financially attractive by providing financial incentives.

Purpose and benefits of FIT

The primary purpose of FiT was to promote the uptake of small-scale renewable and low-carbon electricity generation in the UK. For homeowners, the scheme offered tax-free payments for the electricity generated by eligible systems, typically over 20 or 25 years. This long-term financial certainty helped de-risk the initial investment in renewable technologies like solar panels.

How FIT payments worked

FiT payments consisted of two main components: a generation tariff and an export tariff.

1. Generation tariff: This was a payment for every unit (kWh) of electricity your accredited system generated, regardless of whether you used it in your home or exported it to the grid. These rates were set by the government and adjusted annually, initially by the Retail Price Index (RPI) and later by the Consumer Price Index (CPI) for some contracts.
2. Export tariff: This provided an additional payment for surplus electricity that was exported back to the National Grid. For many FiT contracts, this was a 'deemed' export, meaning it was estimated as 50% of the generated electricity for technologies like solar photovoltaic (PV), wind, combined heat and power, and anaerobic digestion, rather than being based on actual metered export. For hydro installations, the deemed export was 75%.

Eligibility criteria for FIT

To be eligible for the FiT scheme, installations typically needed to be small-scale, with a capacity of up to 5 megawatts (MW), or up to 2 kilowatts (kW) for micro combined heat and power (CHP) systems. The scheme covered specific renewable technologies such as solar PV, wind, hydro, anaerobic digestion, or micro CHP. The installation date and the system's capacity also influenced the tariff rates.

The closure of the FIT scheme

The FiT scheme played a crucial role in accelerating the adoption of renewable energy in the UK, but it was eventually phased out.

When did the FIT scheme end?

The Feed-in Tariff scheme closed to new applications on 31 March 2019. This decision followed government consultations, largely driven by the significant fall in the cost of installing renewable technologies, particularly solar panels, which reduced the need for the initial subsidies.

Impact on new solar installations

For homeowners considering new solar panel installations today, the FiT scheme is no longer an option. However, this does not mean there are no financial incentives for generating your own electricity. Instead, the focus has shifted to the SEG, which provides payments specifically for exported electricity. You can learn more about how solar panels work and their benefits for your home by reading our guide on how do solar panels work.

Managing your existing FIT payments

If you were fortunate enough to secure a FiT contract before the scheme closed, your payments continue for the duration of your contract.

Understanding your FIT contract

FiT contracts typically last for 20 years from the installation's eligibility date, though some earlier contracts were for 25 years. Your FiT licensee, which is a licensed electricity supplier, is responsible for making these payments to you. These payments are based on the terms and conditions you agreed to, known as your 'statement of FiT terms'.

Submitting meter readings to your FIT licensee

To ensure you receive accurate payments, you must submit regular meter readings to your FiT licensee. Your licensee will typically inform you when these readings are due, often on a quarterly basis. These readings allow them to calculate your generation and export payments correctly.

What happens if you switch energy suppliers?

Your FiT contract is separate from your standard energy supply contract. This means that if you switch your energy supplier for your imported electricity and gas, your FiT payments will generally remain unaffected and continue to be managed by your FiT licensee. However, it is always wise to check with your FiT licensee if you are planning to switch, especially if they are also your energy supplier.

The Smart Export Guarantee (SEG): the current alternative

With the closure of the FiT scheme, the SEG was introduced to ensure homeowners continue to be rewarded for generating clean electricity.

How SEG replaced FIT

The SEG came into effect on 1 January 2020, replacing the export tariff component of the FiT scheme for new installations. The SEG is a government-backed initiative that requires licensed electricity suppliers to pay small-scale generators for the low-carbon electricity they export back to the National Grid.

Key differences between FIT and SEG

While both schemes incentivise renewable energy generation, there are crucial differences:

• Payment structure: FiT offered both a generation tariff (for all electricity generated) and an export tariff (for exported electricity). SEG, however, only pays for the electricity you export to the grid.
• Tariff rates: FiT rates were set by the government and adjusted for inflation. Under SEG, individual energy suppliers determine their own export tariff rates, which must always be above zero pence per kWh. This creates a competitive market where rates can vary significantly.
• Metering: SEG payments require a smart meter capable of providing half-hourly readings, ensuring payments are based on precise export data. Many FiT contracts used 'deemed' export, estimating 50% of generation as exported. Understanding your meter is crucial; you can find out more about what is a smart meter and its benefits.
• Contract length: FiT contracts were long-term, typically 20-25 years. SEG tariffs usually have shorter contract terms, often 12 months.

Eligibility for SEG

To be eligible for SEG, you must have an eligible renewable electricity generation system (such as solar PV, wind, hydro, micro combined heat and power, or anaerobic digestion) with a capacity of up to 5MW, or up to 50kW for micro-CHP. Crucially, you need a smart meter capable of sending half-hourly readings to accurately measure your exported electricity. Energy suppliers with over 150,000 domestic customers are mandated to offer an SEG tariff, while smaller suppliers can choose to offer them voluntarily. Fuse Energy offers an SEG tariff.

Earning from your solar panels today

For homeowners with new solar installations, the SEG offers a clear path to earning from their surplus energy. You might also be interested in exploring solar panel grants to help with the initial investment.

Choosing an SEG provider

Since SEG tariff rates vary between suppliers, it is essential to shop around to find the best deal for your exported electricity. Some suppliers may offer higher rates if you also take your imported energy supply from them, often referred to as a 'bundle'.

Comparing SEG tariffs

When comparing SEG tariffs, look beyond the headline rate. Consider whether the tariff is fixed or variable, the payment frequency, and any specific eligibility criteria, such as requiring you to be an existing electricity customer with that supplier. Rates can change, so it is worth reviewing options periodically.

Maximising your export earnings

To get the most out of your solar panels with SEG, consider these strategies:

• Optimise self-consumption: The electricity you use in your home directly from your solar panels is free, saving you money on your import bill. Using high-energy appliances during daylight hours when your panels are generating can maximise these savings.
• Battery storage: Installing a home battery allows you to store excess solar energy generated during the day and use it later, rather than exporting it for a lower SEG rate. This can further reduce your reliance on grid electricity and increase your overall savings.
• Smart home integration: Smart energy management systems can help you automatically optimise when to use, store, or export your solar energy based on your consumption patterns and SEG rates.

Frequently asked questions about FIT and SEG

Can I still get Feed-in Tariff?

No, the Feed-in Tariff scheme closed to new applications on 31 March 2019. If you installed solar panels after this date, you are not eligible for FiT payments. However, you can apply for the SEG to get paid for the electricity you export to the grid.

Is FIT tax-free?

For most domestic generators, FiT payments are generally exempt from income tax, provided the system is installed at or near their home and is not intended to generate significantly more electricity than the home uses. Significantly usually means not exceeding home use by more than 20% in these circumstances. However, it is always advisable to review your individual situation and seek appropriate tax advice.

What if my FIT contract ends?

When your FiT contract reaches its end (typically after 20 years), you will no longer receive FiT generation or export payments. At this point, you can explore options such as applying for an SEG tariff to continue earning from your exported electricity. You may also consider optimising your self-consumption or investing in battery storage to maximise the value of your generated power.

Managing your home's energy can be straightforward and rewarding. Fuse Energy is committed to making clean energy accessible and understandable for everyone. With clear pricing, real-time usage data in the app, and 24/7 human customer support, we help you take control of your energy bills. Switching to Fuse is quick and easy, designed to fit seamlessly into your life.

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