April 2010 saw the introduction in Great Britain of support payments to encourage small-scale renewable energy installations of up to 5 megawatt (MW) capacity. These payments are made by your electricity supplier under the Feed-in Tariff (FIT) scheme, also called the 'Clean Energy Cashback' scheme. They currently apply to electricity generated by solar panels, wind turbines, anaerobic digestion, and hydro-power. 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 government aims to provide a return of 5-8%, so the initial FITs vary to match the divergent costs and outputs of the different types of microgeneration schemes. 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. This degression does not apply to existing contracts, hence the sooner you take up the scheme, the greater will be the payback. Tariffs will be paid for 20 years, or for 25 years in the case of solar PV, and will be adjusted in line with inflation. Levels of tariffs have been set until 31 March 2012 (see table below), and will be reviewed in 2013.
| Technology | Capacity | Initial tariff (p/kWh) | Tariff lifetime (years) |
| Solar photovoltaic (PV)* | <4 kW (new build) | 37.8 (21.0)* | 25 |
| <4 kW (retrofit) | 43.3 (21.0)* | 25 | |
| 4-10 kW | 37.8 (16.8)* | 25 | |
| 10-50 kW | 32.9 (15.2)* | 25 | |
| Wind | <1.5 kW | 35.9 | 20 |
| 1.5-15 kW | 28.1 | 20 | |
| 15-100 kW | 25.4 | 20 | |
| Anaerobic digestion | <250 kW | 14.7 | |
| 250-500 kW | 13.7 | 20 | |
| >500 kW | 9.9 | 20 | |
| Hydro | <15 kW | 22.0 | 20 |
| 15-100 kW | 19.7 | 20 |
*IMPORTANT NOTE: 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 top rate of 43.3p/kWh will fall to 21p/kWh. The table shows the new rates in brackets. 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. Those accredited after this date 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 may result 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'
Outcome of consultation and proposals for the future
Solar PV
In February 2012 the government announced its response to the consultation on feed-in tariffs for solar PV. It confirmed the above tariffs, and also announced a requirement after 1 April 2012 that buildings must meet a certain level of energy efficiency if the solar PV system is to qualify for the FITs. Further, it is proposing further cuts to the FITs rate in July and October 2012, possible 6-monthly reviews of the tariff thereafter, redution of the tariff lifetime to 20 years, and limiting or removing index linking. See FITs face slimdown in summer.
Other renewables
New FIT rates for wind, hydropower, anaerobic digestion (AD) and micro combined heat and power (microCHP) are proposed for introduction in October 2012. Rates for wind will be decreased, while those for hydro and AD remain broadly at current levels, and the tariff for micro-CHP will increase. From April 2014 rates will be subject to a 5% cut every year - so-called 'degression'.