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How does the Feed-in-Tariff for solar panels work?

Feed-in-Tariff (FiT) is a programme designed to provide payment to green energy generators. The scheme is meant to accelerate investment in renewable energy technologies.Anyone eligible to receive the FiT benefits by receiving the Generation tariff as well as Export tariff payment besides saving big on energy bills. Here is how solar panel feed in tariff UK services work:

Generation Tariffs
This is a payment made by the energy supplier for every kWh of electricity an installation by a household generates. The rate changes yearly in regards to inflation for every new entrant into the programme (except for the first two years). After joining the tariff, one continues to receive the payment for 20 years according to the current policy.

While the payment is determined by the size and type of technology in use instead of a set rate, solar PV has been known to be among the most profitable option.

Export Tariff
Here is a bonus payment to green energy generators for every surplus kWh of electricity they generate and export to the electricity grid. Usually, the payment has a set ‘floor price’ of 5.24p per kWh. You can actually negotiate a new price with your energy supplier for the energy you export back to the electricity supplier who then delivers the electricity to another customer. This scheme is meant as an extra incentive to encourage households with solar energy schemes that they will still receive money for any extra electricity they generate.

Where does the Feed-in-Tariff money come from?
The money paid to solar energy generators including other green energy producers actually comes from electricity customers provided with electricity by the energy suppliers. Of course, the energy suppliers facilitate the receiving of money and paying of the FiTs schemes. So this money does not come from the government. This plan essentially makes traditional energy users pay for self-generated electricity. All costs in the scheme are distributed across all energy companies but an option for smaller energy suppliers to reject tariff customers exist.

Below is a Feed-in-Tariff Rates Table for solar panels. This reflects the variation in payments in regards to size as mentioned earlier. The table has FiT rates valid from October 1, 2018, to December 31 2018.

Export tariff for all eligible technologies is 5.24p/kWh
Only 30,000 micro-CHP installations are eligible for the tariff. When 12,000 units are installed, there must be a review. Terms to understand:

  • Retrofit means installed on a building already occupied
  • New Build means where installed on a new building before the first occupation
  • Stand-alone is that not attached to a building nor wired to provide electricity to an occupied building

Energy needs to be measured since the tariff payments are based on kWh when being produced and exported. Besides the import meter used to calculate energy bills, there are 2 more different meters required to read 3 energy flows. You’ll need to install the generation and export meters for measuring the energy. There are Smart meters which can measure all required readings which are soon to become universal.