On 19th July 2018 the Department of Business Energy and Industrial Strategy (BEIS) announced that the FiT (Feed-in Tariff) scheme, also known as the FiT rate, will be closed earlier than originally planned. If you have or are considering solar PV for your home, here’s how the announcement affects you.
What is the FiT Scheme?
The FiT scheme is a government incentive programme. It was introduced in 2010 to encourage homeowners and businesses to use renewable and low-carbon technology to generate electricity. The most common systems in the UK to benefit from the FiT are solar PV systems, but it also applies to micro-hydro, wind power, anaerobic digestion and cogeneration. The FiT scheme pays the owner of the system for every unit of energy they generate.
How Does the FiT Scheme Work?
When a solar PV system is installed a meter is usually installed at the same time. This monitors how much electricity the system is generating. You, as the owner, receive a payment for every unit of energy generated known as the generation tariff. These payments are not made by the government, but by energy suppliers. The ‘Big Six’ energy companies are legally required to participate in the scheme, but many of the smaller suppliers have also signed up.
You also receive a payment for every unit of energy generated that you don’t use. Solar PV systems usually produce more electricity than can be used in a day and, unless you have an energy storage system like a solar battery, this electricity is automatically sent to the National Grid. There is a separate payment for this energy known as the export tariff. However, many solar PV systems do not have export meters to monitor how much energy you’re sending to the Grid. In these cases the energy supplier pays based on 50% of the generation figure.
How Much Could You Earn With the FiT Rate?
The FiT rate is recalculated each quarter and has been steadily reducing so in previous years this queuing system only meant that some applicants would qualify for a slightly lower FiT rate than they originally thought. However, as the FiT rate is ending, this queuing system may mean applications received towards the end of the scheme may miss out completely if the deployment cap is reached. Homeowners planning to install solar PV are advised to take action as soon as possible to avoid missing out on the FiT payments. Get free solar PV quotes now.
FiT payments are made on a quarterly basis and the tariff rate is fixed for 20 years from your eligibility date. That means that even when FIT rates decrease (or stop), you will still receive the same rate as when you signed up.
The rate you will receive will also depend on the type and size of the solar PV system and the energy efficiency of your home:
- Higher Rate: for single solar PV installations which meet the Energy Efficiency Requirement
- Middle Rate: for owners of 25 or more other eligible solar PV installations which meet the Energy Efficiency Requirement
- Lower Rate: for installations which do not meet the Energy Efficiency Requirement
Most domestic installations have capacities below 4kW. If the property meets the Energy Efficiency Requirement these installations will qualify for the ‘higher’ generation rate. The Energy Efficiency Requirement applies to PV installations installed on or after 1 April 2012. Properties with a valid Energy Performance Certificate (EPC) showing a rating of level D are eligible for the higher or middle rate.
For applications accepted before 1st September 2018 the generation tariff will be 3.93p/kWh and the export tariff 5.24p/kWh.
Calculate how much you could earn through the FiT scheme with Solar Guide’s Feed-in Tariff Calculator.
IMPORTANT: In February 2016 the government introduced deployment caps which placed a limit on the amount of installations which can qualify for the FiT rate in each quarter. Applications are processed on a first come first serve basis and applications made later in the quarter may be pushed into the next round. As the scheme is closing, this may mean some eligible applications may be rejected if the cap has already been met, even if submitted before the deadline.
When is the FiT Rate Ending?
The FiT closure takes effect from April 1st 2019; any applications received after 31st March 2019 will not be eligible. The government is yet to confirm if there will be another incentive scheme to replace it.
What You Need to Do Next…
If you already receive the FiT rate nothing will change so you don’t need to do anything; you’ll continue to receive the same payments until 20 years have passed since your eligibility date. For some people who fitted their solar PV back at the start of the scheme this may be 25 years.
If you’re considering installing a solar PV system (or one of the other eligible systems) there is still time do so and secure yourself the Feed-in Tariff payments for the next 20 years, but you will need to make your application soon.
To ensure your solar PV is eligible for the FiT rate it needs to be installed by an MCS registered installer and your application needs to be made by 31st March 2019. However, it’s important to note that submitting an application on time is not a guarantee of being successful as there is a limit to the amount of applications which can be accepted in each quarter and the eligibility criteria must be satisfied.
It’s best to get multiple quotes for your installation to be sure you’re getting the best quality for the best price. You can get up to 3 FREE quotes from MCS registered solar panel installers in your area from Solar Guide.