The FiT, or Feed In Tariff, scheme was the original way to sell your electricity back to the national grid via a microgeneration system.
When it was launched in 2010 it was expected to incentivise people to install renewable energy systems in their homes.
Unfortunately, as the years passed, it became less and less viable and was discontinued in 2019 when SEG took over.
So, let’s take a look at the history of FiTs, how they nearly destroyed the solar power industry and what replaced them.
2010 and the Introduction of Feed in Tariffs
In 2009 the UK government were looking for ways to boost the renewable energy offer in the UK.
The development of wind and solar farms is a fantastic way to do this, but restructuring the grid and its supply is expensive, as well as being time consuming.
To try and kickstart the process, the government set about exploring ideas to boost public interest in domestic solar installations.
The one that won was the Feed In Tariff.
How did the Feed in Tariff work?
The initial idea behind the feed in tariff was to pay anyone with a renewable microgeneration system a set amount for the total amount of electricity generated, calculated per unit, plus extra for any they exported to the grid – which was assumed to be 50% of any power they produced.
You need the correct accreditation for your system, which was quite lax at the time, and you could be generating using solar, wind, hydro, anaerobic digestion (AD) or micro combined heat and power (Micro CHP).
The tariffs varied depending on your set up, home, and whether you were a domestic or commercial generator.
What were the original rates for the Feed in Tariff
This was the bit that made it go all wrong!
A rate of 41.3p/kWh was set for the start of the Feed in Tariff.
Bearing in mind that we were buying electricity at a much lower rate than we are now, which is around 27p per kWh, back in 2010, that was a very generous rate.
It also, meant companies were buying electricity from homes for nearly twice as much as they could sell it for.
Customers received an annual, or twice annual, cheque for the electricity they had generated.
11,314 households signed up for the FiT in the first 3 months after it was launched.
How did Feed in Tariffs go so wrong?
Well, initially it didn’t, it went very well indeed as many people installed Solar on their homes and signed up for the FiT.
Companies were also ‘renting’ people’s roofs to install solar panels, giving that home ‘free’ electricity and claiming all the FiT payments.
One of the unwanted side-effects of this new solar boom was unregulated installers throwing up anything they could to make money by convincing customers they would soon be rich.
The whole plan was woefully flawed as energy companies realised they were giving money away and customers were being ripped off by cowboy companies looking to make a fast buck.
So, in March 2012 the tariff rate for solar PV was reduced to 21p per kWh and in August 2012 it was reduced further to 16p per kWh.
The reductions continued until 2019 when the buyback price was down to about 4p per kWh.
By that time, the domestic solar industry’s reputation was in tatters and, for all intents and purposes, needed to be reset.
Do people still have Feed in Tariffs?
FiT contracts were between 10 and 20 years, some even 25, so there are still many FiTs out there with people earning good money – and people not doing quite so well.
If you have a system connected to a FiT you cannot change it’s output in anyway so, if you need to upgrade your tech, you need to speak to someone who knows the law and what can be done.
Basically, you need a separate system running alongside your old one.
If you buy a home with an FiT, the contract must be signed over to you as the scheme is connected to households, not individuals.
If you’re looking to get rid of your FiT you can simply cancel it after talking to your supplier, or you can sell it to one of the many companies that specialise in FiT acquisition.
What replaced the Feed in Tariff?
In 2019 the FiT was finally scrapped and replaced with the Smart Energy Guarantee, or SEG.
While the legislation retained the obligation for the energy companies to take exported electricity from domestic micro-generators, the price is set by the suppliers themselves.
This means that companies who have no real interest in buying your electricity will be offering as little as 2p per kWh.
But more forward-thinking companies who wish to move the domestic energy offer over to renewables, will offer customers as much as 45p per kWh, at peak times, on their more flexible tariffs.
Flexible SEGs are a great for modern solar users, they offer customers a chance to sell excess energy back into the grid at a time that suits them.