The Feed-in Tariff (FiT) scheme: an expert guide

The Feed-in Tariff (FiT) provided a financial incentive for UK households and businesses to produce their own renewable electricity, and succeeded in massively increasing solar adoption rates across the nation.

After it stopped taking on additional customers, a new scheme took its place as the primary way of compensating solar homes: the Smart Export Guarantee (SEG). This initiative has created a more profitable, flexible, and competitive market for solar panel owners.

In this article, we’ll look at the FiT’s impact on households, how it affects people who are still signed up to it, and how you can benefit from the 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 government initiative introduced in April 2010, which compelled energy suppliers to pay households and businesses for generating and exporting renewable electricity.

The scheme sparked incredible growth in the number of solar homes, particularly in its first five years.

While it was mainly used by households with solar panels, the FiT covered a range of renewable energy technologies, including wind, hydro, anaerobic digestion, and micro combined heat and power (micro-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 government set up the FiT to assist in its transition to a low-carbon, decentralised electricity network that puts less pressure on the grid.

This was intended to help the UK as it electrifies its transport and heating systems to cut costs and hit its net-zero targets.

To meet this overriding goal, the government created five main objectives for the FiT:

1. Encourage deployment of small-scale low-carbon electricity generation
2. Empower people and give them a direct stake in the transition to a low-carbon economy
3. Assist the public take-up of carbon reduction measures
4. Foster behavioural change in energy use
5. Help develop local supply chains and drive down energy costs

The scheme followed in the footsteps of similar government programmes in Germany and the US that date back to the 1990s and 2000s, and managed to increase solar adoption in their countries to varying degrees.

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.

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.

What are the current Feed-in Tariff rates?

Each year, Ofgem increases its Feed-in Tariff rates in line with inflation, and publishes them on its website.

We've used the rates published in April 2024 to demonstrate how Feed-in Tariff rates fell over the years (focussing specifically on systems with a capacity of 4kW, connected to buildings that were occupied prior to installation, and meeting the 'higher' Energy Efficiency Requirement rating).

For example, a household that had a solar panel system installed between April 2010 and April 2011 will receive 71.85p for each kWh generated between April 2024 and April 2025.

In contrast, a household that had a system installed between April 2018 and March 2019 will receive just 5.46p for each kWh generated between April 2024 and April 2025.

You'll also spot that, for systems installed after April 2016, their generation rate for April 2024-April 2025 is lower than their export rate.

Current Feed-in Tariff rates, April 2024

Can you still access the Feed-in Tariff?

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

Do old applicants still receive Feed-in Tariff payments?

If you signed up to the FiT before it closed, you'll keep receiving export and generation payments until the end of your contract, which is usually 20 years for solar homes.

Your export rate depends entirely on when you signed up.

As of November 2024, solar panel systems installed between April 2010 and July 2012 are currently receiving a rate of 5.07p for every kWh they send to the grid, while solar installations completed from August 2012 to April 2019 are getting 7.14p per kWh.

Generation payments are more complicated.

As well as your sign-up date, they’re also based on your system’s size, whether it was installed on an occupied property or a new build, and whether it boosted your Energy Performance Certificate (EPC) rating to a D or above.

Fortunately, most solar panel systems raise a property’s EPC rating by at least a grade – which also increases the home’s value.

Generation rates have varied wildly. If you had a 4kWp system or smaller installed on your home and signed your FiT contract between April 2010 and the end of March 2011, you’re currently earning 71.85p for every kWh your system produces.

However, if you installed the same system between April 2015 and March 2016 and it raised your EPC rating to a D, you’ll be receiving a relatively paltry 6.38p per kWh.

Each year at the start of April, Ofgem adjusts the FiT generation and export tariffs according to the Retail Price Index. In 2024 for example, these rates went up by 5.2%.

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. 

The cost of solar energy has also fallen a long way since the beginning of the FiT in 2010. 

Its price was $2.15 per watt in 2010, but by 2019 had tumbled 81% to $0.40 per watt. Solar became significantly more affordable, which reduced the need for the government to provide a financial incentive.

Was the Feed-in Tariff a success?

The FiT was a massive success in multiple ways.

It cut electricity bills, empowered people all over the country, reduced the country’s carbon emissions, and increased the grid’s capacity and flexibility.

Most importantly, it popularised going solar, to the extent that the number of solar households in the UK skyrocketed from around 24,000 at the start of 2011 to more than 838,000 by the end of 2015.

This five-year period is still responsible for 56% of the country’s domestic solar installations, according to government data.

This era ended in January 2016, when the government cut FiT generation tariffs dramatically. The rate for the average 4kWp retrofit plummeted overnight, from 17.49p per kWh to 6.38p per kWh.

It was a turning point. Generation rates never recovered, and it had a direct effect on the number of solar installations.

The next five years, from the start of 2016 to the end of 2020, saw fewer domestic systems installed – combined – than in 2015 alone. 

Solar sales have soared back to their peak levels since 2021, due to both the creation of the Smart Export Guarantee – more about that below – and the spiralling electricity prices produced by the global energy crisis.

Residential UK solar panel installations by year

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.

The SEG compels energy suppliers with at least 150,000 customers to pay households for the renewable electricity they export to the grid, though it doesn’t include a generation rate.

Initially, energy suppliers offered low rates simply to fulfil their obligation, but a growing realisation that higher tariffs can attract new customers has since made the market extremely competitive.

There are now many time of use tariffs – including Intelligent Octopus Flux and British Gas Electric Driver – that allow you to profit by importing electricity to your battery at off-peak times, then using or selling it during peak periods.

From the start of April 2023 to the end of March 2024, a massive 283,666 installations signed up to an SEG tariff – three times more than the previous year’s 92,946 total – according to Ofgem’s Annual Report.

It was also considerably more than the 153,010 new domestic installations in this period, because it also includes households with older systems that joined an SEG tariff during this time.

Overall, households on SEG tariffs earned £30.7 million – a 327% increase on the £7.2 million received in the previous year.

How do SEG rates compare to FiT rates?

SEG tariffs only pay you for exported electricity, unlike the FiT, which also paid you simply for generating electricity.

But even though households are no longer paid for every kWh of electricity they generate, the earnings you can make by exporting your electricity are substantially better.

As of November 2024, any solar household that signed up to the FiT after August 2012 will receive 7.14p per kWh until the end of March 2025.

Compare that with the best SEG rates, which include more than a dozen better tariffs. If you’re happy to change your import supplier, you can currently earn three times as much as you can on the FiT export rate – or more.

Can you claim FiT payments and SEG payments?

If you’re signed up to the FiT, you can keep receiving generation payments until the end of your contract, but you’ll have to choose between getting FiT or SEG export payments.

With many SEG tariffs paying a significantly higher rate than the current FiT export rate, this may seem like an easy decision.

However, many households on FiT don’t have an export meter. These homes receive ‘deemed’ export payments, which means the government estimates what percentage of their solar electricity they’ll export each year. Currently, this is set at 50%.

81% of the money paid out by the scheme for exports is deemed, according to Ofgem’s annual report.

If you’re among this number and export less than 50% of your solar electricity, you may be better off staying on the FiT – so make sure you work it out before switching.

For example, a household exporting 1,200kWh per year would be getting £85.68 from the Feed-in Tariff export rate, but £180 from a standard 15p SEG tariff.

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 some 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.

Next steps

The FiT prompted a revolution in the first half of the 2010s.

It created the necessary conditions for more than 800,000 UK households to go solar, transforming an industry that had previously made very little progress.

The UK went from a solar capacity of 14.6MW before the scheme to 10,000MW at the end of 2015. Progress slowed down enormously when the government cut FiT rates – but the SEG has kick-started uptake once again.

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

Feed-in Tariff: FAQs