The Feed-in Tariff (FIT) was a government program launched in 2011 to promote the use of domestic renewable energy, such as solar panels, wind turbines, and hydroelectric systems.
Under this scheme, homeowners were paid for any renewable energy they generated and fed back into the grid.
However, the FIT program closed to new applicants on March 31, 2019. Those already enrolled still receive payments, but no new entries are allowed.
The end of the FIT scheme reduced incentives for new renewable installations, but it paved the way for emerging energy initiatives that are now gaining traction.
This guide explores these new renewable energy options and how they operate.
What Was the Feed-In Tariff Scheme and How Did It Work?
The Feed-In Tariff (FIT) was a government program designed to incentivize homeowners to generate their own electricity using renewable energy sources like solar panels, wind turbines, and hydro systems.
Participants received payments for each unit of electricity produced, based on the rate set when their FIT agreement was established.
The payments were divided into two main components:
- Generation Tariff: A fee paid per unit for the total electricity generated, regardless of usage.
- Export Tariff: A fee paid per unit for electricity exported back to the national grid. Without a smart meter, this typically covered 50% of the generated electricity.
The FIT payment rate was set when you signed up, but several factors influenced your actual earnings:
- Electricity Usage: How much of the generated power you use in your home.
- Generation Output: The total electricity produced by your renewable system.
- Energy Source Type: Whether it’s solar, wind, or hydro power.
When the scheme launched in 2011, early participants earned up to 55p per kWh. However, as more people joined and technology costs fell, rates dropped to around 5p per kWh before the scheme ended in 2019.
Although the FIT scheme no longer accepts new applicants, existing participants still receive payments. The program is currently managed by Ofgem (learn more about the FIT scheme on Ofgem’s website).
FIT payments are made by your energy supplier, provided they are a licensed FIT scheme participant.
The FIT scheme only applies to those generating renewable electricity (e.g., solar panels, wind turbines). For renewable heating solutions like solar water heating, air source heat pumps, and ground source heat pumps, there’s the Renewable Heat Incentive (RHI) program.
The RHI scheme offers financial rewards for adopting renewable heating systems and, unlike the FIT, is still active. You can find more details on how to apply on the Which? website.
For existing FIT participants, payments are typically made quarterly and continue for 20 years (or 25 years if you signed up before August 2012).
What Scheme Replaced the Feed-In Tariff?
Although the Feed-In Tariff (FIT) scheme ended, it has been replaced by a new program: the Smart Export Guarantee (SEG). This initiative offers a fresh opportunity for homeowners to earn from renewable electricity generation.
What is the Smart Export Guarantee (SEG)?
Launched on January 1, 2020, the Smart Export Guarantee (SEG) allows licensed energy suppliers to pay homeowners for renewable electricity fed back into the grid, similar to the old FIT scheme.
The SEG covers renewable energy generation from:
- Solar PV systems
- Micro CHP (Combined Heat and Power)
- Wind turbines
- Anaerobic digestion (AD)
To qualify for SEG payments, your system (excluding Micro CHP) must generate under 5MW and have an export meter, with Smart meters preferred for their accurate, automatic 30-minute readings.
How Does the Smart Export Guarantee (SEG) Work?
Under the SEG scheme, your registered energy supplier (SEG licensee) measures the electricity you export to the grid and pays you a set rate per unit. You can find a list of SEG suppliers here. The supplier also reports your energy contributions to Ofgem.
Importantly, SEG payments must always be above zero, even if wholesale electricity prices go negative.
Who Can Qualify for SEG Payments?
To apply for SEG payments, you need an MCS-certified renewable energy system. You’ll need to provide your MCS certificate during registration. Eligible technologies include:
- Wind
- Hydro (water)
- Micro CHP
- Solar PV
- Anaerobic digestion
How Much Can I Earn from SEG Payments?
Earnings from SEG payments depend on various factors like weather, system quality, roof type, and installation angle. Since it only covers the electricity you export to the grid, your actual earnings will vary based on how much energy you generate and consume at home.
While SEG payments can provide additional income, they typically won’t cover the full cost of installing systems like solar PV, hydro, or wind turbines. If maximising income is your goal, choose an SEG tariff that offers the highest rate for exported energy.
Solar PV array supplying energy to the grid under the SEG tariff
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Which Companies Offer SEG Payments?
Under the SEG scheme, energy suppliers with over 150,000 customers are required to provide at least one SEG tariff. Smaller providers can choose to offer SEG tariffs, and many do.
To see a complete list of SEG suppliers, visit the Ofgem website.
Types of SEG Tariffs
SEG offers two main types of tariffs: Flexible (Variable) and Fixed Rate:
- Flexible/Variable Rate: The payment per unit of electricity fluctuates based on demand. You may earn more during peak times (e.g., evenings) and less when demand is lower (e.g., daytime).
- Fixed Rate: A set payment per unit of electricity, regardless of the time it’s exported to the grid.
Your choice of tariff depends on your needs. While the earnings difference might be small, flexible rates could be beneficial if you can export energy during peak times. However, using stored energy at home might be more cost-effective than selling it.
For variable rates, some providers use schemes like the Social Energy Grid Trading Scheme. This AI-powered system trades stored battery energy, selling it back to the grid at the highest price and buying energy at the lowest cost.
While this approach can be profitable, it’s essential to research as costs may vary depending on market conditions.
How to Apply for SEG Payments
To qualify for SEG payments, you must have a renewable energy system installed in your home, such as solar PV, wind, or micro CHP. The system must be installed by a certified, reputable company and be MCS accredited.
The MCS (Microgeneration Certification Scheme) ensures your system meets high standards and uses certified products.
Example of an MCS Certificate
Once you’ve met the requirements above, choose an SEG-registered energy provider from the list on the Ofgem website. It’s important to compare options carefully, read all terms, and select the supplier offering the best per-unit rate.
After selecting your SEG supplier, you’ll need to provide your MCS certificate to confirm your system meets all standards. You may also be asked to prove ownership of the renewable energy system.
Additionally, you’ll need a way to track how much energy you send to the grid. This can be done using either an export meter or the preferred Smart meter, which sends readings every 30 minutes to your supplier.
To apply for a SEG tariff, make sure you have the following:
- An MCS-certified renewable energy system (e.g., solar, wind, hydro)
- Proof of ownership of the system
- A Smart meter that sends data every 30 minutes
- An application form for your chosen SEG supplier
- Additional forms if you have an anaerobic digester
If you generate your own electricity with a renewable energy system like solar, wind, or hydro, signing up for an SEG tariff is a smart move. This is especially true if you’re already sending energy to the grid, as without SEG, that energy is going to waste without any payment.
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