Feed in Tariffs

Feed-in tariffs (FiTs), have been available since April 1 2010, and are designed to incentivise businesses and individuals to install small scale electricity generating technologies by guaranteeing a minimum payment for the electricity generated as well as the electricity exported to grid.
The scheme is designed to incentivise everything from a one kilowatt (kW) system fitted to a single home to a five megawatt (MW) wind turbine powering a whole community.

Either way, the incentive comes in three parts:

- The generation tariff, which takes the form of a fixed payment from the business’s or individual’s electricity supplier for every unit of energy or kilowatt hour (kWh) generated

- An export tariff, which will pay an extra 3p/kWh, in addition to the generation tariff, for any electricity not used on-site and ‘exported’ to the grid

- Offsetting of on-site use of electricity – where the business or individual uses the electricity on-site, this can be offset against electricity that would otherwise have been bought elsewhere.

At the moment, the FiT scheme only applies in England, Wales and Scotland. Northern Ireland has not yet taken a decision on implementing the scheme.

What technologies are supported by the scheme?

Small scale, low carbon electricity technologies initially eligible for the scheme include: wind; solar photovoltaics (PV); hydro; anaerobic digestion; and, as a pilot, domestic scale microCHP (with a capacity of 2kW or less).

The pilot for domestic scale microCHP (micro combined heat and power) is initially designed to support up to 30,000 installations, with a review to start once the 12,000th installation is completed.

Solid or liquid biomass technologies are not currently covered by the FiT scheme, although they will continue to receive support under the Renewables Obligation (RO). The decision to exclude biomass from the FiT scheme when it is already covered by the RO, has been described as “confusing” by campaign group Friends of the Earth.

The idea is that FiT should only support tried and tested technologies that can be effectively deployed in the short term. Wave, tidal and pyrolysis technologies are not currently covered.

New technologies will be considered for inclusion under FiT at the first of the scheme’s reviews, due in 2013.

Is accreditation needed?

To qualify for a FiT payment, it will be necessary to use a product and installer certified under the Microgeneration Certification Scheme (MCS).

According to Ofgem, MSC approved products and installers must be used for any installation after April 1 2010 if it is is wind, PV or hydro at or below 50kw capacity, or fossil fuel CHP at or below 2kw.

Wind, PV and hydro above 50kw and anaerobic digestion systems of any size do not require MSC approval – indeed, the MCS does not certify these yet – instead, they must seek accreditation from Ofgem.

Microgenerators transferring to FiT, that have already gained accreditation under the RO, do not need MSC certification.

How much do you get?

Tariff levels vary depending on the type and scale of installation, ranging from 4.5p kWh for some hydro to 41.3p for retrofit PV (though will generally be in the ballpark of 20-35p/kWh) for installations completed between July 15 2009 and March 31 2012.

The tariff is fixed for the lifetime of the installation (usually 20 years, but 25 years for PV) and linked to the Retail Price Index (RPI) to ensure it holds its value in real terms.

Payments for some technologies will be fixed at a lower rate after the FiT scheme has been running for two or three years, reflecting the fact that the cost of these technologies is expected to fall over time.

More information?

DECC The Government Response to the Consultation on Feed-in Tariffs
Ofgem
Carbon Trust
Energy Saving Trust
Renewable Energy Association
British Wind Energy Association

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