What was the Feed-In Tariff and why did it end?

The UK’s Feed-In Tariff (FiT) was a groundbreaking subsidy in its time, promoting the growth of renewable energy across the country by providing a financial incentive. However, discussions about the financial sustainability of the scheme led to its eventual demise. 

In this article, we’ll look at the FiT’s impact on the renewable energy industry and talk about how you can benefit from its replacement, the Smart Export Guarantee (SEG). 

If you’re wondering how much a solar & battery system could save you, answer a few quick questions below and we’ll provide you with an estimate.

What was the Feed-in Tariff?

The Feed-in Tariff was a UK government policy introduced in April 2010, designed to provide cash payments in exchange for the generation of clean electricity.

While it’s often associated specifically with solar panels, the FiT covered a range of renewable energy technologies, including wind, hydro, anaerobic digestion, and micro combined heat and power (CHP).

The FiT scheme offered two types of payments:

• Generation Tariff: This payment was for all the electricity produced by a renewable system, regardless of whether the generator used or exported it. The generation tariff was originally set at around 40-50p per kilowatt-hour (kWh).
• Export Tariff: Besides the generation payment, participants could also receive an export tariff for any electricity that they sent to the grid. The export tariff was originally set at around 3p per kWh. 

The FiT payments were guaranteed for a set period, which was typically around 20 years, depending on the technology and when the system was installed. The payments were all funded by a levy on everyone else’s energy bills.

Why was the Feed-in Tariff set up?

The FiT’s primary aim was to encourage the adoption of renewable energy technologies by providing a financial incentive. 

This was part of a broader environmental strategy to reduce greenhouse gas emissions and improve the UK's energy security.

Who qualified for the Feed-in Tariff?

Homeowners, business owners, and organisations were eligible for the FiT, provided they installed one of the qualifying renewable energy technologies. The scheme was open to both existing and new energy producers.

Can you still access the Feed-in Tariff?

The FiT schemestopped accepting new applications on 31 March 2019. That means new installations can't join the scheme and get the old tariffs.

How much could you earn with the Feed-in Tariff?

In the FiT’s early days, the payments for producing and selling electricity were quite generous. In 2011, owning a domestic solar PV installation of up to 4 kilowatts peak (kWp) could earn you up to 46.81p for every kWh of electricity generated, as well as 3.3p for every kWh of electricity exported to the grid. It meant that people could recoup the high upfront cost of solar panels pretty quickly.

However, there was a steep drop in rates by the end of the scheme because of tariff degression policies (i.e., a planned reduction in rates over time) and the falling cost of renewable technology. In the case of solar PV, for example, the upper rate for new installations of 10kWp or less was just 4.01p per kWh in 2019. That’s more than a 90% decrease in just eight years. 

The rates that people received varied based on their sign-up date and installation details, and these rates stay the same throughout their 20-year contract.

Historical feed-in tariff rates

Check out the chart below to see how much money the Feed-in Tariff paid out each year between 2011 and 2019.

These rates were paid out to systems with a capacity of 4kW or less and connected to buildings that were occupied prior to installation (except the rates for 2017 and 2018, when the classifications changed - these were paid to systems with a capacity of 10kW or less). Where relevant, we have displayed the 'upper limit' for each year.

All data is sourced from Ofgem.

Feed-in Tariff rates from 2010 to 2019

Do old applicants still receive Feed-in Tariff payments?

If you were already part of the FiT scheme before it closed, you'll keep getting payments as agreed, usually across a 20-year period for solar PV systems, and a 10-year period for micro CHP systems. So, if you joined the FiT scheme in 2019 with a solar panel system, you'll keep getting payments until 2049.

Why did the Feed-in Tariff end?

The FiT ended because it had ultimately served its purpose: to trigger growth in domestic renewable energy installations in the UK. 

What’s more, the cost of solar energy had also fallen a long way since the beginning of the FiT in 2010. According to the International Renewable Energy Agency, the global cost of solar energy in 2010 was $2.15 per watt, but by 2019 it had tumbled 81% to $0.40 per watt. Solar had become significantly more affordable, which meant there was less reliance on the UK government to provide a financial incentive.

Was the Feed-in Tariff a success?

Despite the high costs, the FiT was a definitive success, helping to take the UK’s solar capacity from a meagre 95 megawatts (MW) in 2010 to 13,345 MW by 2019.

Is there a replacement for the Feed-in Tariff?

The Smart Export Guarantee was introduced as a replacement for the FiT on 1 January 2020.

Unlike the FiT, the SEG isn't a direct government subsidy. Instead, it requires all large energy suppliers (i.e. those with at least 150,000 customers) to pay for renewable electricity exported to the grid by households.

Initially the SEG rates offered by energy suppliers were relatively low, but over time some very competitive export tariffs have emerged, which are not strictly the same as the Smart Export Guarantee. For instance, some of these export tariffs don’t actually require you to generate electricity in a renewable way, they just require you to have a storage battery.

Some export tariffs - such as Intelligent Octopus Flux (offered by Octopus Energy) - pay you roughly the same price for exporting electricity as you would pay for importing it from the grid.

Will the UK ever bring back the Feed-in Tariff?

The chances of the UK bringing back the FiT are slim. As solar technology continues to improve and become more affordable, the need for financial incentives is becoming ever slimmer, and the export tariffs offered by energy providers are also becoming increasingly competitive.

However, there are still government grants available for certain people looking to get solar panels.

And if you’re wondering how much a solar & battery system could save you, answer a few quick questions below and we’ll provide you with an estimate.

Feed-in Tariff: FAQs