What is the Feed-in Tariff scheme?

The scheme will require Licensed Suppliers e.g EDF, to pay a generation tariff to small-scale low-carbon generators e.g. Schools, for electricity generated (whether or not such electricity is exported to the national grid) and an export tariff to them where such electricity is also exported to the national grid. This means that, for example, a school will benefit from free electricity during the day and get 12.9p per unit used, assuming the solar energy system installed is up to 250 kWp.

The FITs scheme guarantees a minimum payment for all electricity generated by the system, as well as a separate payment for the electricity exported to grid. These payments are in addition to the bill savings made by using the electricity generated on-site.

Once you have a microgeneration technology installed you should experience a monthly reduction in your electricity bill and then receive an income from your Feed-in tariff provider. However, if you have taken out a loan to pay for the installation you will have to make monthly repayments to your loan company.

Feed-in tariffs are designed so that the average monthly income from your installation will be significantly greater than your monthly loan repayment.

The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS scheme.

You will qualify for the full FIT payments if:

• The technology was installed between 15th July 2009 and 31st March 2010 and you transfered to FITs before 1st April; OR
• It is installed after 1st April 2010 using an MCS certificated product and installer;

* The Microgeneration Certification Scheme (MCS) is an independent scheme that certificates microgeneration products under 50kW and installers in accordance with consistent standards. Any commercial or larger scale systems, over 50kW, and all anaerobic digestion installations must apply directly through the Renewables Obligation Order feed-in tariff process for larger installations (ROO-FIT) process as they are not covered by the MCS.

Tariff levels vary depending on the scale of the installation and all generation and export tariffs will be linked to the Retail Price Index (RPI) which ensures that each year they follow the rate of inflation.

How the scheme works

If you are eligible to receive the FIT then you will benefit in 3 ways:

1. Generation tariff – a set rate paid by the energy supplier for each unit (or kWh) of electricity you generate. This rate will change each year for new entrants to the scheme, but once you join you will continue on the same tariff rate, plus an RPI increase each year.

2. Export tariff - you will receive a further 3.2p/kWh from your energy supplier for each unit you export back to the electricity grid, that is when it isn't used on site. The export rate is the same for all technologies.

3. Energy bill savings – you will be making savings on your electricity bills , because generating electricity to power your appliances means you don't have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site and the price that you pay for the electricity that you would have used.

Deemed export

Domestic FIT installations are likely to have their export deemed (estimated) at 50% in most cases until smart meters are rolled out.

Example of how the Feed-in Tariff works

As an example, a typical domestic solar electricity system, with an installation size of 3.0 kWp could earn around:

• £550 per year from the Generation Tariff
• £40 per year from the Export Tariff
• £160 per year reduction in current electricity bills.

This gives a total saving of around £700 per year.

This assumes 50% of the electricity generated is exported. The figure will vary depending on how much is exported.

What payments will you be eligible for, and how can you claim them?

The tariffs available and the process for receiving them vary, depending on when the technology was installed, and whether the system and the installer were certificated under the MCS scheme:

The following advice applies to domestic installations. If you have installed a qualifying electricity-generating system in a non-domestic property with a grant from the Low Carbon Buildings Programme, see the Low Carbon Buildings Programme website for further guidance.

Installed before July 15th 2009 and previously collected Renewables Obligation Certificate (ROCs) payments

• If you contacted Ofgem before 1st April 2010 to get your ROC transferred to the FIT then you will receive 9p/kWh for every unit generated plus 3p/kWh for every unit exported

Installed before July 15th 2009 but not registered for Renewables Obligation Certificates

• If you didn't contact Ofgem by 31st March 2010 to apply for Renewables Obligation accreditation then you won't be eligible for FITs.
• If you did register with Ofgem by 31st March 2010 then you will receive the flat tariff of 9p/kWh for every unit generated plus 3p/kWh for every unit exported.

Installed between 15th July 2009 and 1st April 2010

• You will get full FIT payment if your installation is MCS certified (installer and product). You can apply after April 1st 2010 if you haven't already.
• If your installation wasn't MCS certified and you didn't contact Ofgem by 31st March 2010 to apply for Renewables Obligation accreditation then you won't be eligible for FITs

Installed after 1st April 2010. MCS certificated product and installer

• You are eligible for full generation tariff and export tariff.
• Contact your energy supplier, and send them your MCS certificate to tell them you are eligible to receive FITs.
• If you install after the 2nd year of the scheme your tariff could be reduced, depending on the installation size.

Installed after 1st April 2010. Non-MCS certificated product and installer

• Systems that are not MCS certificated will not be eligible to receive the FIT generation tariff or the guaranteed FIT export tariff. There is the possibility of receiving generation and export tariffs outside of the FIT scheme if privately negotiated.
• You will still benefit from lower electricity bills. The saving will depend on how much of the electricity you generate is used on-site.

Small Generators (50kW to 5MW) installed from 15th July 2009

• If you switched from Renewables Obligation Certificates (ROCs) to FITs before 1st April, then you will be eligible to receive the full generation tariff and export tariff.