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07 Oct 2020
Adam Bate Confused.com

What is a Feed-in Tariff? Make money from green energy in your home

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Money bank pig as solar panel

You can do more than just feel good about being green. You can earn some cash while you’re at it.

If you’ve recently installed renewable technology or you’re looking to do so, you can boost your bank balance through the Smart Export Guarantee (SEG).

The SEG came after the Feed-in Tariff scheme, which started in 2010.

Both let you sell energy back into the National Grid, but there are some differences.

We don't compare feed-in tariffs - this guide is for informational purposes. But we can help you compare energy prices. 

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Key points

  • The Feed-in Tariff scheme ended on April 1, 2019.

  • FIT tariffs pay you for the energy you generate, and sell back to the grid.

  • You can still get FIT payments if you signed up before the deadline.

  • The Smart Export Guarantee has replaced the FIT.

  • Under the SEG you will only be paid for the renewable energy you export back to the grid.

  • You can shop around for the best SEG tariff.

 

Jump to...

 

What is the Feed-in Tariff?

The Feed-in Tariff (FIT) scheme pays you to generate and export your own renewable energy.

That means you get paid for the energy you sell back to the National Grid, and also for the energy you use.

But you do still have to pay for any non-renewable energy you use.

The FIT scheme closed to new applicants on 1 April 2019.

But all is not lost if you’ve just installed renewable technology of if you’re looking to do so.

To find out more, jump to our Smart Export Guarantee section.

 

How does the Feed-in Tariff work?

You must have a renewable technology installed in with a Microgeneration Certification Scheme (MCS) certificate.

MCS certified means your product has been installed to a high standard.

This could be:

  • Solar panels 

  • Wind turbines 

  • Micro-CHP (micro-combined heat and power).

  • Or ROO-FIT (Renewals Obligation Order Feed-In Tariff) accredited: 

  • Hydroelectric systems  

  • Anaerobic digesters, which break down matter like food or animal waste to create bio-gas and bio-fertiliser).

 

There are two types of payments, with the rates fixed by the government. These are the generation tariff, and the export tariff.

Generation tariff

You get paid for each kWh hour of electricity you produce and use.

Your rate, set by the government, will depend on:

  • The size and type of technology

  • The energy efficiency of your home

  • The installation date.

Export tariff

This is the bit where you can earn extra by selling back to the National Grid.

Currently, you’ll get 5.24p per unit of electricity.

READ MORE: How to make your home energy efficient 

 

Can I change my Feed-in Tariff supplier?

You can change your Feed-in Tariff provider if you want. But your payments won’t go up.

That’s because the rates are set and fixed by the government, not the suppliers.

 

Why has the Feed-in Tariff ended?

The cost of renewables has fallen sharply since the scheme’s introduction in 2012.

That means there’s less need to encourage people to take up renewable energy.

 

Will I still get paid if I’m part of the Feed-in Tariff scheme?

Yes. You’ll still get payments for the duration of your contract.

The scheme has closed to new applicants, but it hasn’t ended.

 

What is the Smart Export Guarantee (SEG) and how is it different to the Feed-in Tariff?

The Smart Export Guarantee (SEG) replaced the Feed-in Tariff scheme in January 2020.

It’s for businesses and homes that generate solar power and other renewables on a small scale.

The biggest difference is that under the SEG, you won’t be paid for the electricity you use.

You’ll only be paid for the electricity you sell back to the grid. 

But you’ll still be saving money by using your own generated energy, rather than a supplier’s.

You’ll still have to pay for the non-renewable energy you use.

Feed-in Tariff

Smart Export Guarantee

Payment rates are fixed

Payment rates are set by energy supplier

You get paid for the electricity you sell back to the grid

You get paid for the electricity you sell back to the grid

You get paid for the electricity you generate and use

You don't get paid for the electricity you generate and use

 Closed to new applicants

Open to new applicants 

 

How do I get the Smart Export Guarantee?

You must have one of the following renewable energy technologies to apply:

  • Solar photovoltaic (PV) panels

  • Domestic wind turbines

  • Hydro

  • Anaerobic digestion

  • Micro-combined heat and power (Micro-CHP).

You must also have proof that your installation is Microgeneration Certification Scheme (MCS) certified – or an equivalent.

There are also limits on the output of these technologies, of five megawatts, or up to 50 kilowatts for micro-CHP.

A megawatt is equal to one million watts. For reference, one megawatt is enough energy to power around 2000 homes for an hour.  

You may also need a smart energy meter so your provider can see how much electricity you are sending back to the grid.

READ MORE: What is a smart meter? 

 

What energy suppliers offer a Smart Export Guarantee tariff?

Energy suppliers with more than 150,000 UK-customers are required to offer at least one SEG tariff.

Smaller companies can choose to do so, too.

The big six suppliers all offer SEG tariffs: British Gas, EDF Energy, ScottishSPower, npower, E.ON, SSE.

You can also find SEG tariffs with: Social Energy, OVO, Bulb, Octopus, Shell, Green Network Energy, Utilita, Avro, Utility Warehouse, and E.

 

How much can I earn from the Smart Export Guarantee?

The price you get for the energy you sell back to the grid is no longer fixed.

Energy suppliers are free to set the price they offer. But it must be more than 0 pence.

This may sound silly, but sometimes prices can fall below zero. When this happens, power suppliers have to pay wholesale customers to buy their electricity.

Research from the Solar Trade Association suggests Social Energy is providing the highest fixed tariff, offering 5.6p per unit of electricity.

Most SEG tariffs are fixed, but some are variable.

Variable tariffs are pegged to demand, meaning you could get more money for the electricity you sell to the grid during peak times.

When comparing tariffs, you may want to consider other factors such as:

  • How often you get paid

  • The length of the contract

  • Whether it’s a fixed or variable tariff

  • Whether you have to buy your non-renewable energy from the supplier as well.

 

If I'm already signed up to a Feed-in Tariff should I switch to a Smart Export Guarantee?

The Smart Export Guarantee is designed for new renewable technology owners.

It’s unlikely that you’ll earn as much by switching to a SEG tariff if you already have a FIT tariff.

FIT tariffs estimated your electricity export at 50% of what you generated, whereas SEG tariffs pay you for the exact amount.

This means that on a FIT tariff, you’d be better off if you used more than 50% of the electricity you produced.

And remember, you won’t be paid for the electricity you generate and use if you switch from a FIT tariff to a SEG tariff.

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