A guide to the Feed-in-Tariff

29-11-2017 Back

Solar PV and the Feed-in-Tariff

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How does the scheme work?
How long do the payments continue for?
How much money will I receive?
How do I apply?


Introduction

The Feed-in Tariff (FIT) is a government scheme that pays people to adopt environmentally-friendly renewable technology to generate electricity for their homes or commercial premises.

The scheme supports different kinds of technology that makes use of energy from the sun, wind, water and other renewable sources.

This guide focuses on solar photovoltaic (PV) systems – solar panels fitted to the roof of your house or premises that use the sun’s rays to produce electricity.

Note: The FIT does not make payments for solar thermal systems, which are used to heat domestic hot water. Solar thermal systems are supported through the Domestic Renewable Heat Incentive (RHI) programme, which is a similar scheme to the FIT but for renewable heat technologies.



How does the scheme work?

The FIT scheme is owned by the Government’s Department of Business, Energy and Industrial Strategy (DBEIS) and managed by the energy regulator Ofgem.

Major energy suppliers have a legal obligation to pay people who invest in renewable technologies that generate electricity. They’re known as the FIT licensees, and they handle applications to the scheme and award the payments.

While the big energy suppliers must do this by law, the smaller ones can opt out (although many choose to provide the service anyway).

There are different ways to apply for the scheme, depending on the size of the solar PV system you’re looking to install.


If your application is accepted, you’ll benefit in the following three ways:


Generation tariff

You’ll receive a payment every three months (‘tariff period’) for all the electricity you generate. This is called the generation tariff. You’ll be given a fixed tariff rate against every unit of electricity you produce. This rate will apply for the full period from when you register on the scheme.


Export tariff

You can also sell back to the grid any electricity you produce but don't use yourself. This is known as the export tariff. Most households don’t have a system to record the electricity they export, so the export tariff is set as an ‘estimated’ amount. This is currently 50% of all the electricity your system generates.


Savings on your energy bills

Producing your own electricity using a solar PV system means you’ll also benefit from lower energy bills. Find out how much money you could save on your electricity bills each year.



You’ll need to submit meter readings to your FIT licensee as normal, and you’ll be paid from the date you first become eligible for the scheme.


How long do the payments continue for?

The tariffs are set by the Government and change from year to year, so they could go up or down. The Government also applies a ‘degression’ mechanism, which means they reduce the tariff if the costs of installing solar PV systems continue to fall.

However, the tariff you receive when you install your solar panels is guaranteed for 20 years.



How much money will I receive?

This depends on a number of things, including:

•    the size and capacity of your solar PV system
•    the direction of your roof
•    the tariff rate you were given when you registered on the FIT scheme

You’ll be assigned a tariff rate when your system has been certified. The rates are set by the Government every tariff period, in line with the Retail Price Index. The table below shows the tariffs available from 1 October to 31 December 2017.

As an indication, a property in Yorkshire with a 4kW solar PV system on a south-facing roof could receive £12,333* in income and savings over the 20-year lifespan of the FIT scheme.

•    Generation tariff payment of £3,360
•    Export tariff payment of £2,113
•    Electricity bill savings of £6,860

* Calculated using standard MCS methodology using the tariff period 1 October to 31 December 2017. Assuming there is no shading and the property has an EPC certificate of D or above. Assumptions – 50% of generated electricity is exported, RPI 2% and the resident’s current electricity tariff is £0.12 per kW.


The tariff rate you’re assigned depends on a number of factors:


Date you became eligible for the scheme

Whatever the tariff rate is when you join the scheme, that’s the rate you’ll get for the full 20 year tariff period.


Capacity

The size of your solar PV system is measured in kilowatts (kW), and most residential systems are between 1kW and 4kW. When you apply for the FIT, you’ll need to provide two figures:

•    The total installed capacity (TIC) – the maximum capacity at which the system can operate for a sustained period without being damaged.
•    The declared net capacity (DNC) – the TIC less the amount of electricity the system needs to operate (i.e. the capacity of the inverter).

Your DNC determines who you make your application to.

•    A DNC of 50kW or less – e.g. a home or small business premises – is classed as a small installation. For these, you apply to the Microgeneration Certification Scheme (MCS).
•    A DNC of more than 50kW and a TIC up to and including 5MW is considered a large installation. For these, you apply to Ofgem.



Energy efficiency requirement (EER)

Energy performance certificates (EPCs) tell us how energy efficient a building is and define what the EER will be. Using a scale of A to G (with A being the most efficient), they show how expensive the building will be to heat and light, and what the rating could be if improvements were made (e.g. installing more insulation, upgrading heating systems etc.).

For the purposes of the FIT, solar PV systems are given a higher, middle or lower rate. This is based on whether:

•    the EER for the building for which the system provides electricity has been met
•    the owner is operating multiple systems at once




Higher rate EER
 
Middle rate EER Lower rate EER

The building has an EPC
rating of D or above

 
The building has an EPC
rating of D or above
The building has an EPC
rating of D or above

The EPC has been issued within
the last 10 years and before the date the installation was commissioned

 
The EPC has been issued within
the last 10 years and before the date the installation was commissioned
The EPC was not issued
before the date the installation
was commissioned

 

The owner does not have
25 or more installations

 
The owner has 25 or
more installations
 


If your property is rated below band D, you can still get FIT payments – you’ll just be assigned a lower tariff rate.

Not all buildings need to meet the EER. If this exemption applies to you, the EPC assessor will let you know by letter, which you’ll need to pass on to your FIT licensee.

However, it’s worth making sure you have all the proper energy-saving measures in place so your building is given the necessary EPC rating of D or above. Contact us for more information on what measures you can install.



Deployment cap

The latest FIT scheme includes deployment caps. These place restrictions on the total number of systems that can be installed in the UK in a given period. The cap is governed by the collective output (e.g. capacity) of the systems being installed. If the cap has been met, you’ll need to wait for the next tariff period to join the scheme (which is likely to have a different tariff rate).

The periods are as follows:

Tariff period 1    1 January–31 March
Tariff period 2    1 April–30 June
Tariff period 3    1 July–30 September
Tariff period 4    1 October–31 December

If the maximum capacity is reached during a tariff period, the scheme will delay registering any new installations until the next period, and the tariffs in tariff periods that follow will be reduced by 10%.

Ofgem publish a weekly deployment update on their website that shows the status of all caps within the current tariff period.



Feed-in-Tariff Rates


FIT - 1 October 2017 to 31 December 2017
 
Description
 

Total installed capacity (kW)
 
Generation tariff (p/kWh) Export tariff (p/kWh)
Standard solar PV receiving
the higher rate

0–10
10–50
50–250

 
4.00
4.22
1.89
5.03
Standard solar PV receiving
the middle rate

0–10
10–50
50–250

 
3.60
3.80
1.70
Standard solar PV receiving
the lower rate

0–10
10–50
50–250

 
0.38
0.38
0.38

 
Standard large solar PV
250–1,000
1,000–5,000

 
1.54
0.38
Stand-alone solar PV
0–5,000
 
0.23

* Figures taken from Ofgem


How do I apply?

Microgeneration Certification Scheme (MCS)

MCS is a nationally recognised scheme set up to ensure that solar PV systems (and other microgeneration products), and the companies that install them, meet strict standards of quality and reliability.

The systems are certified to established European and international standards. Installers are accredited based on how they supply, install, set to work and commission the solar PV technology.

•    Installing – fixing the solar panels to your building
•    Setting to work – everything done to ensure the panels function as a complete system
•    Commissioning – making sure the installed system works safely and as it should

If an installer meets the MCS’s requirements, they’ll receive a quality mark that they can present as a guarantee of their workmanship.

YES Energy Solutions is an MCS-certified organisation and is committed to providing quality solar PV installations.




Applying to MCS

To claim the FIT, your solar PV system must be installed and commissioned by an MCS certified installer. The product itself should also be certified.

Once your system has been commissioned, the installer will register it with the MCS. You should receive an MCS certificate within 10 working days.

You then need to tell your FIT licensee that you want to register for the FIT. They will ask you to:

•    fill in and return an application form
•    send your MCS certificate
•    provide your EPC

The FIT licensee will then:

•    confirm that you’re eligible for the FIT scheme and from what date
•    add you to Ofgem’s register of installations that receive the FIT (if a deployment cap is in force, you might be placed in a queue according to the date and time your MCS certificate was issued)
•    tell you when your payments will begin.




Ofgem – ROO-FIT accreditation

For large installations (systems over 50kW), you’ll need to create an account on the Renewables and CHP Register, Ofgem’s online system for managing all its different renewable energy schemes. You can apply either for full or preliminary accreditation:

•    Full accreditation – if your solar PV system has already been commissioned, or has preliminary accreditation and is due to be commissioned in the next two months.
•    Preliminary accreditation – if your solar PV system is yet to be commissioned. Getting preliminary accreditation is worthwhile as it gives you both a guaranteed tariff and the peace of mind that your system will be accepted for the FIT scheme.

Answer all the questions in the application, making sure everything is correct. You’ll also need to agree all the declarations and provide certain bits of evidence:

•    Your G59 certificate – this shows that your system has been tested and connected to the electricity grid. It must give the date the testing was done.
•    A signed declaration from your installer confirming the date your system was commissioned.
•    A signed statement from your installer confirming your system’s TIC.

Depending on how complicated it is, your application will go through a two- or three-stage process. Ofgem might contact you for further information or clarification on the details you’ve provided.





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