The Government Feed-In Tariff Explained

Wondering what the feed-in tariff is and how it works? Then look no further. We’ve got all your answers right here!

What is the Feed-In Tariff?

The feed-in tariff system was introduced by the UK government in 2010 as a replacement for a grant system. With this scheme you will be paid for choosing environmentally friendly power sources. In the real world this means that should you choose to fit solar panels to your house or have a wind turbine on your property then the government will pay you a certain amount of cash tax free.

Why Are They Doing This?

There are several reasons why the government is paying people to produce clean energy, but they all come down to pretty much the same thing: for the environment. Various international laws and treaties have been signed in which the UK has promised to produce a certain amount of clean energy (i.e. solar, wind and hydro energy) and this feed-in tariff is an incentive to help meet government targets. Clean energy does not use fossil fuels and does not emit greenhouse gases, so helps to prevent global warming.

What Does it Mean for Me?

For you all this means the opportunity to make some money and to save some money. Should you choose to, say, install solar panels in your home then there are three main ways that you will benefit:

  • The government will pay you a set rate for every kWh (kilowatt hour) of electricity you produce
  • The government will also pay you a set rate for every kWh of electricity you put back into the grid for other people to use
  • Finally, you will be able to use the electricity you generate yourself, cutting down on your home energy bills.

How Much Money Will I Be Getting?

The set rates for the feed-in tariff change quite frequently. However, right now the government is paying 12.92p for each kWh of electricity produced by solar energy (it doesn’t matter whether you use that energy yourself or not, you still get paid), and a further 4.85p per kWh for electricity that you put back into the grid. However, this is only for homes that have an Energy Performance Certificate of grade D or above.

Should your home’s Energy Performance Certificate be below a grade D then you will qualify only for the lower set rate of 5.94p per kWh of energy produced, though you still get the same 4.85p per kWh for electricity put back into the grid.

What’s an Energy Performance Certificate?

An Energy Performance Certificate is a certificate that gives your home a grade for how energy efficient it is. A certificate must be given by a government approved assessor and is valid for ten years or until structural changes have been made to your property.

Is This Forever?!

No. If you sign up for the scheme now your feed-in tariff rates are guaranteed for twenty years and will also rise in line with inflation. What happens after twenty years? No one knows yet. You may be able to re-sign up with different tariff rates, or the government may have scrapped the programme altogether.

How Do I Qualify?

There are several things you need to do to qualify, depending on which energy source you wish to use. Your best bet here is to contact your energy company and ask them to send you the relevant information. In general though, you’ll need to meet certain requirements for who manufactures and installs your clean energy system (the company that makes and fits your solar panels, for example). You’ll then need to fill out a contract with your power company, who will submit it to the government. The money you make will be paid to you by your energy company.

Can I Use Any Energy Company?

All UK energy companies that serve over 250,000 customers are required to take part in the feed-in tariff system, though many smaller companies have also chosen to take part. You’ll need to contact your energy company to find out. Additionally, you should know that participating in the feed-in scheme does NOT tie you to one energy company, you’ll still be able to switch companies whenever you like.

A Word of Warning!

The government reviews the feed-in tariff system every three months, at which point they quite often change the set rates that are paid to customers. Your rate will be fixed at whatever it was when you signed up, but you should know that rates are likely to change in coming months. This means that if you’re thinking about installing a clean energy system then the rates may have changed from the prices quoted here by the time you’re up and running.

The feed-in tariff is the UK government’s attempt at incentivising clean energy, and it is perfectly possible to make money and save on your own energy bills by taking part in the scheme. This isn’t an ideal solution for everyone, but for some it can be a money maker!

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