The Feed-in Tariff (FIT) – also known as the “Clean Energy Cashback” – is a Government scheme that is designed to encourage the uptake of small scale (under 5MW) renewable electricity generation in the UK’s homes and businesses.
It does this by offering financial incentives to those that start generating renewable energy:
- a payment is made for every unit of electricity generated
- an additional payment is made for every unit of electricity not used by the person or project who are doing the generation, but is instead sold into the grid for other people to use
There is also a third financial benefit to generating your own renewable energy but is one that is not technically part of the FIT but rather an implicit benefit:
3. people/projects can save money on their energy bills by using energy they generate
Payments under the FIT are managed by an energy company of your choice and paid to you through your quarterly bills. These payments are free of income tax, index-linked and (depending on the technology) are currently guaranteed for between 20 and 25 years.
The technologies that are supported through the FIT are solar photovoltaic (PV) panels, wind turbines, anaerobic digestion and domestic non-renewable micro-CHP (up to 2kW and for an initial pilot of 30,000 units). The amount if income that you can receive under the FIT depends on which technology you are using and how much electricity you generate. Typical returns vary greatly depending on the situation and technology employed. However, the government has designed the FIT to give between 5% and 8% returns annually for properly installed systems.
The following is the Department for Energy and Climate Change’s Table of Tariffs which outlines payments that different types and sizes of technology are eligible for.
To be eligible for the FIT, your installation needed to have taken place on or after 15 July 2009. Earlier installations, and those over 5MW in size, may instead receive payments under the ROCS system.