What Is the Feed-In Tariff in the UK?

Earlier this century, the threat of human-made climate change — and the geopolitical consequences of a world wholly reliant on fossil fuels — became crystal clear.

The UN Framework Convention on Climate Change (COP), begun in 1995, spurred global initiatives to fight the catastrophic warming of the Earth.

Governments worldwide began to incentivise their citizens and industries to adopt cleaner, renewable sources of fuel.

For most individuals and households, solar power and solar panel systems were (and continue to be) the most viable way to generate electricity without relying solely on utility providers that burn fossil fuels.

By reducing — or even eliminating — on-grid power, families could achieve energy security in a time of escalating extreme weather events and ageing infrastructure.

Another option became selling the electricity your system produced in excess of what your household consumed.

In the United States, this is called Net Metering. In the UK, it’s known as a Feed-in.

But how exactly does it work — and how do you get paid?

Here’s where you find out.

A Feed-in Tariff in the UK is a government program designed to incentivise “the uptake of renewable and low-carbon electricity generation.”

For homeowners and communities, renewable electricity generation almost always means solar panels and a balance of system.

To participate in the Feed-in Tariff scheme or similar incentives, your residential solar power system MUST be tied to the utility grid.

Off-grid solar panel systems are not eligible for the scheme.

On-grid solar power systems connect to the utility grid through an inverter and bidirectional meter. The type of inverter and electricity meter required depends on your location and your electricity provider.

If you plan on participating in a grid-tied incentive scheme, it’s essential to ensure the balance of system you purchase conforms to the specific requirements of your utility provider.

The Feed-in Tariff scheme bears many similarities to net metering programs in the US and other countries.

During the day, any electricity your solar panel array generates in excess of your household consumption is sent back to the grid through the bidirectional meter. You then receive a credit against your on-grid electricity consumption at other times of the day.

Depending on your location, as an accredited FiT generator, you may have several options regarding the FiT licensee you want to “partner with” to participate in the FiT scheme.

As a homeowner, you must install an eligible solar power system and register with the FiT licensee (on-grid electricity supplier) of your choosing to participate in the scheme.

In addition to FiT Generators and Licensees, Ofgem plays an essential role in the Feed-In Tariff scheme.

As you can see from the above screenshot of the latest FiT Rates RPI Update, your FiT rate can vary significantly based not only on the form of renewable energy you harness but also on the type of photovoltaic (solar) installation you have installed.

That’s just a small sample.

Over 70 types of solar power systems appear on the current list.

FiT payments are typically made quarterly (the maximum allowable timespan) and based on meter readings that you submit. Depending on your FiT Licensee (utility provider), you may receive your FiT payments as a cheque or bank transfer — or as a credit against the electricity you consumed over the billing period.

For most homeowners and individuals, the Feed-In Tariff is synonymous with solar energy.

Most of these are viable options for commercial-scale projects, not for residences.

The Feed-In tariff remains in place for many households and businesses that installed solar PV arrays or other eligible renewable energy systems.

However, registration for the FiT scheme is closed to new applicants as of 1 April 2019.

Registered FiT Generators are unaffected and will continue to enjoy the scheme’s benefits for years to come — for as long as their installation remains eligible under the original terms of the agreement.

But what if you’re a homeowner considering a switch to solar power now?

There’s a new option to sell the electricity you generate to your utility provider.

Read all about it below.

The Feed-in tariff scheme closed to new subscribers in April 2019, even though it was deemed a success.

Before the program stopped accepting applicants, approximately 850,000 consumers and businesses participated in the scheme. Many of them continue to do so.

However, a new coalition government began making cuts to FiT incentives in 2011, less than a year after the scheme launched. The government continued to chip away at FiT benefits, and in 2018, the Department for Business, Energy and Industrial (BEIS) announced its closure, giving less than a year’s notice.

A year later, BEIS and Ofgem announced a new program to incentivise small-scale renewable electricity production called the Smart Export Guarantee (SEG).

So, what is SEG?

And are you eligible?

The Smart Export Guarantee (SEG) is a government incentive program launched on 1 January 2020 available to renewable energy generators that have a total installed capacity (TIC) of 5 megawatts (MW) or less.

Total installed capacity means the maximum capacity a system can handle at once without damage or failure. Given that even a huge mansion is unlikely to generate or consume more than 10kW at any given time, the 5mW cap on SEG eligibility isn’t intended to affect residential generators.

5mW is about 500 times more than almost any home would ever need.

Like the Feed-in Tariff, SEG is designed to incentivise people and organisations to generate electricity from renewable energy sources like solar.

However, it differs from the FiT in one essential aspect.

Unlike FiT, SEG pays you only for the electricity you export to your utility provider — there’s no compensation for the total amount of electricity your solar power system generates. You’re only paid for the electricity you generate in excess of what your household consumes and sells to an SEG licensee.

Depending on the size of your system and your consumption, it is possible to make more money from SEG than FiT. If you’re currently a FiT generator and considering switching to SEG, make sure to do the math. You may be better off staying at FiT.

Detailed instructions on how to become a “licensed SEG generator” can be found here.

If your solar power system meets the eligibility requirements — as most modern residential solar solutions should — you are guaranteed a choice of electricity suppliers to purchase power from and receive payment for electricity you export back to the grid.

For the Smart Export Guarantee legislation, electricity suppliers (utility providers) are called SEG Licensees, and a licensed person or company that sells electricity back to a licensee is called a SEG Generator.

As an SEG Generator, it pays to shop around when choosing which SEG Licensee to sell your electricity to. Utilities are required to pay eligible “small-scale low-carbon generators” (like an individual or household with solar panels) for electricity exports, but the price and terms can vary greatly.

The list of registered SEG licensees from 1 April to 31 March 2024 is as follows.

Mandatory SEG Licensees
British Gas
E (Gas & Electricity)
E.ON
EDF
Octopus Energy
OVO Energy
Scottish Power
Shell Energy
So Energy
The Utility Warehouse
Utilita

Voluntary SEG Licensees
Pozitive Energy
Rebel Energy

Even if you missed the boat on the Feed-in Tariff, the Smart Export Guarantee (SEG) makes switching to solar the smart alternative to relying on your utility provider alone.

Going solar can dramatically reduce your electricity bills — or even make you money.

If you install a solar battery as part of your system, you can save even more. With the right solar power system and storage, you can even achieve energy independence.

If you have a residential solar panel system enrolled in FiT or SEG, retrofitting a high-performance LiFePO4 solar battery system like EcoFlow PowerOcean DC Fit can substantially increase your long-term return on investment.

Check out our whole home battery solutions today!