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Feed-in tariffs: the essentials

solarpanelsApril 2010 saw the introduction in Great Britain of support payments to encourage small-scale renewable electricity installations of up to 5 megawatt (MW) capacity. These payments are made by your electricity supplier under the Feed-in Tariff (FIT) scheme. They currently apply to electricity generated by solar panels, wind turbines, anaerobic digestion, hydro-power, and micro combined heat and power (microCHP). However, different rates apply to the different technologies.

The feed-in tariff comprises two elements: a generation tariff, or fixed payment for every kilowatt hour (kWh) generated, and an export tariff, or an additional payment for every kWh exported to the grid. The electricity generated on site also means that bills are reduced, because less electricity is being supplied from the grid.

This system is similar to ones running in many other EU countries, and is designed to encourage the on-site use of electricity generated. This helps to reduce energy losses associated with electricity distribution via the national grid.

Secure financial returns

The FITs payments effectively guarantee a market and price for renewable electricity microgeneration, for 20-25 years, and the government hopes that this will provide the long-term financial security to make the initial investment more attractive. The householder will also gain greater energy independence, and some protection against future rises in energy prices.

Both the technology and installer selected must be certified under the Microgeneration Certification Scheme (MCS), which is intended to provide assurance and protection to consumers. The generator (i.e. householder) is then required to register the installation on the FIT database, with details of the site, technology and ownership, and receive accreditation. The householder receives a certificate, and presents this to the energy company, which will then make arrangements for payments of the tariff. When a property changes hands, the ownership rights, and corresponding FITs payments, will transfer to the new owners.

Tariff levels

The level of FITs vary to match the divergent costs and outputs of the different types of microgeneration schemes. The government's initial aim was to provide a return of 5-8%, but this target was soon exceeded notably for solar PV, prompting subsequent cuts in tariffs. However, the tariff in force when the installation was first registered - the so-called Eligibility Date - applies throughout the lifetime of that installation. Hence, depending on the technology, systems installed in the early years of the FITs scheme can attract different rates to ones installed later. Also, the rate of FIT for new installations on certain technologies will fall in subsequent years, a process called 'annual degression'. This is to reflect expected decreases in capital costs. Tariffs are paid for 20 years (originally 25 years in the case of solar PV; 10 years for micro CHP), are tax free, and are adjusted in line with inflation.

Values shown here are taken from the latest tables published by Ofgem, and are adjusted in line with RPI. For the full list see the Ofgem website.

Changes to FITs from 2016

In December 2015 the government announced the results of a consultation on the FITs scheme. A new regime with much lower tariff rates was introduced from January 2016. For example, new PV systems under 10 kW capacity suffered a 64% cut in the generation tariff . See FITs cuts less than feared.

Caps on deployment

There is now a limit on the total capacity of new installations in each quarter. If and when this quarterly cap is reached, all further applications for FITs will be held in a queue until the next quarter. For example, in Q1 of 2016, no more than 48.4 MW capacity of solar PV in the <10kW band is permitted. The represents around 15,300 installations at typical sizes. Similarly for wind and hydro. Unused capacity in any quarter is added to the next quarter, and any underspend will be redistributed among the technologies as a 'top up'.

Degression

To keep a tight hold on the pursestrings, the FITs rate will fall inexorably over the 3-year period of the new regime - a process called default degression. Moreover, a further 10% contingent degression will be applied if deployment reaches the quarterly deployment cap. So, although the initial rate for small solar PV is 4.39 in Q1 of 2016, this will fall in stages to 4.11 by Q1 of 2017, to 3.83 by Q1 of 2018, and to 3.55 by the start of 2019. Any additional contingent reductions will be published by Ofgem.

Solar PV

Energy Performance Certificate for Solar PV

After 1 April 2012 buildings are required to attain an Energy Performance Certificate (EPC) rating of level D or higher if the solar PV system is to qualify for the highest rate FITs shown above. Otherwise the installation will attract the lowest rate, currently 0.74 p/kWh. Note also that a 'middle band' tariff applies to multiple installations. See the Energy Saving Trust website for more details.

Solar photovoltaic (PV) installations
Capacity Current Feed-in Tariff (p/kWh) for systems installed: Tariff lifetime
  2010 to 2/3/12 3/3/12 to 31/7/12 1/8/12 to 31/10/12 1/11/12 to 30/6/13 1/7/13 to 31/12/13 1/1/14 to 31/3/14 1/4/14 to 31/12/14

 

25 years for installations

up to 31/7/12; 20 years from 1/8/12

<4 kWp (new build) 44.19 23.43 17.87 16.71 16.12 15.70 15.16
<4 kWp (retrofit) 50.67
4-10 kWp 44.19 18.75 16.18 15.15 14.61 14.23 13.74
10-50 kWp 38.50 16.96 15.07 14.09 13.61 13.24 12.78
Export tariff (p/kWh) 3.57 3.57 5.03 5.03 5.03 5.03 5.03
Capacity            

20 years

  1/1/15 to 31/3/15 1/4/15 to 30/6/15 1/7/15 to 30/9/15 1/10/15 to 31/12/15 Quarterly degression*
2016
Quarterly degression 2017
<4 kWp 14.40 13.89 13.41 12.94 4.50, 4.43, 4.36, 4.28 4.11, 4.14
4-10 kWp 13.04 12.59 12.15 11.73
10-50 kWp 12.15 12.15 12.15 11.73 4.70, 4.64, 4.57, 4.50 4.32, 4.36
Export tariff (p/kWh) 5.03 5.03 5.03 5.03 5.03 5.03  

*There was a 4-week pause in processing FITs applications from 15 January 2016 to enable implementation of the new regime, which opened on 8 February 2016. 1st quarter: 8/2/16 to 31/3/16; 2nd quarter: 1/4/16 to 30/6/16; 3rd quarter: 1/7/16 to 30/9/16; 4th quarter: 1/10/16 to 31/12/16.

Note that some earlier tariff bands have been combined or changed.

Other renewables

 
Feed-in tariff levels for other forms of renewable electricity
Technology   Capacity Tariffs (p/kWh) for systems installed in: Tariff lifetime (years)
Wind, anaerobic digestion, hydro SEE INDIVIDUAL TABLES BELOW
Micro combined heat and power (CHP) < 2kW installed electrical capacity 12.28 (1/4/10 to 14/3/13)

13.95 (from 15/3/13)

10
EXPORT TARIFF (all eligible technologies)     1/4/10 to 30/11/12 From 1/12/12  
    3.57 5.03  

 

 
Technology Capacity Tariffs (p/kWh) for systems installed in:
Wind   1/4/10 to 31/3/12 1/4/12 to 30/11/12 1/12/12 to 31/3/14 1/4/14 to 30/9/14 1/10/14 to 31/3/15 1/4/15 to 30/9/15 1/10/15 to 31/12/15 8/2/16* to 31/3/16
  <1.5 kW 42.28 39.95 23.43 18.74 16.87 14.99 14.24 8.74
  1.5-15 kW 32.71 31.24
  15-100 kW 29.57 28.35
 
Wind   Quarterly degression* 2016
(quarters 2, 3, and 4)
Quarterly degression 2017 Tariff lifetime
  <50 kW 8.67, 8.60, 8.54 8.26, 8.39, 20 years
  50-100 kW 7.80, 7.02, 6.23 5.42, 4.95
  100 kW to 1.5 MW 5.01, 4.51, 4.02 3.51, 3.22

 

 
Technology Capacity Tariffs (p/kWh) for systems installed in: Tariff lifetime (years)
Anaerobic digestion   1/4/10 to 29/9/11 30/9/11 to 31/3/14 1/4/14 to 30/9/14 1/10/14 to 31/3/15 1/4/15 to 30/9/15 1/10/15 to 15/1/16 Quarterly
degression*

2016
Quarterly
degression

2017**
 
<250 kW 14.17 16.41 13.15 11.82 10.51 9.46 9.35, 8.52, 7.66, 6.90 6.06, 6.24 20
250-500 kW 14.17 15.18 12.14 10.94 9.71 8.73 8.63, 7.86, 7.08, 6.37 5.59, 5.90
>500 kW 11.06 (to 30/11/12) 10.00 (from 1/12/12 to 31/3/14) 10.00 9.50 9.00 9.00 8.90, 8.10, 7.29, 6.56 5.76, 2.24

**NOTE: Following a consultation, in February 2017 the government announced revised generation rates for AD from 1 April 2017. These are subject to change if contingent degression is imposed. New sustainability criteria and feedstock restrictions will apply from May 2017.

 
Technology Capacity Tariffs (p/kWh) for systems installed in: Tariff lifetime (years)
Hydro   1/4/10 to 31/3/14 1/4/14 to 30/9/14 1/10/14 to 31/3/15 1/4/15 to 30/9/15 1/10/15 to 15/1/16 Quarterly
degression*
2016

Quarterly
degression
2017

20
<15 kW 24.44 (1/4/10 to 30/11/12) 23.43 (1/12/12 to 31/3/14) 22.26 20.03 17.81 16.03 8.75, 7.87, 7.85, 7.84 7.63, 7.80
15-100 kW 21.87 (1/4/10 to 31/3/14) 20.79 18.71 16.63 14.97
100-500 kW 13.52 (1/4/10 to 14/3/13)   17.29 (15/3/13 to 31/3/14) 16.43 14.78 13.14 11.83 6.29, 6.29, 6.28, 6.27 6.11, 6.26

*There was a 4-week pause in processing FITs applications from 15 January 2016 to enable implementation of the new regime, which opened on 8 February 2016. 1st quarter: 8/2/16 to 31/3/16; 2nd quarter: 1/4/16 to 30/6/16; 3rd quarter: 1/7/16 to 30/9/16; 4th quarter: 1/10/16 to 31/12/16.

Note that some earlier tariff bands have been combined or changed.

NOTE for other technologies: There are no EPC requirements for non-solar PV technologies.

And... for solar historians....!

At the end of October 2011 the government announced that it was proposing to cut tariffs for Solar PV, with effect from 1 April 2012. For example, the previous top rate of 43.3p/kWh fell to 21p/kWh. Systems that were installed, commissioned and accredited with an electricity supplier before 12 December 2011 were eligible for the higher tariffs over the full 25-year period. The government had planned that those accredited after this date would get the higher rate until 1 April 2012, and the new, lower rate thereafter. See 'Solar tariffs slashed by half'. However, a legal challenge in December 2011 resulted in the higher rate continuing to apply to solar PV installations registered up to 3 March 2012. See 'Legal tussle leaves FITs in a tangle' and Gov't loses last-ditch appeal on FITs. For a description of how the tariffs are set, as from 1 November 2012, see Solar tariffs to fall from 1 August. Then in late 2015 the results of a wide-ranging government review were published, resulting in further tariff cuts from January 2016 (see FITs cuts less than feared).