A tariff is a tax or fee you must pay when using a service. For instance, you are charged a tariff per kilowatt-hour when you use electricity from the utility company. 

This rate covers the cost of generating and delivering electricity to your home. Under the Feed-in tariff (FiT) scheme, homeowners are compensated for the electricity produced by eligible systems, such as solar panels, wind, hydro turbines, and micro CHP.

This post will explain everything you need to know about the feed-in tariff.

What does “feed-in” mean?

Feed-in” is like a two-way street for electricity. Normally, we get electricity from a big power company to run our homes. But with a “feed-in tariff,” you can also send your electricity back to the power company.

Here’s how it works:

  • You get electricity from the power company to power your home.
  • Suppose you have solar panels or a wind turbine that makes your own electricity. In that case, you can return the extra electricity you don’t need to the power company’s system.
  • The power company actually pays you for the electricity you send back. It’s like they’re buying it from you.

In simple terms, “feed-in” is a way for regular people to buy electricity and sell the extra electricity they make back to the power company. It’s like recycling energy and getting paid for it.

The Feed-in tariff scheme stopped accepting new applications on March 31, 2019. If and when the scheme re-opens, this post will be updated accordingly.

How do I generate power to input into the grid?

It would help if you had solar panels or a wind turbine to generate electricity. Electricity is generated when the sun beams on solar panels. When the wind turns a wind turbine, electricity is produced.

This appliance is wired to your home’s electrical system. During the day, when your solar panels produce more power than your residence needs, the excess energy is fed into the power grid. When solar panels are not producing electricity at night, your home draws power from the grid.

Why would I want to send electricity into the grid?

  • Helping your community: When you transmit excess electricity into the grid, you essentially share clean, renewable energy with your neighbours. This is positive because it implies less air pollution. 
  • Making money: when you send excess electricity to the grid, the power company compensates you! So, not only are you assisting the environment, but your solar panels or wind turbines are also generating additional income. 

How is the feed-in tariff implemented?

The feed-in tariff establishes a fixed price per kilowatt-hour that the utility company will pay you for the electricity generated by the renewable system you input into the grid.

For instance, if the feed-in tariff rate is 15p per kWh and you feed in 200 kWh of electricity in a single month, you would earn £30 (200 x £0.15) on your monthly electric bill.

Typically, the rate is fixed for many years, so you will have a consistent means of earning money from your system over time. The feed-in tariff rate is typically higher than the standard electricity rate.

The advantages of a feed-in tariff

  • Limited warranty coverage: Refurbished battery packs typically have fewer warranty periods than brand-new ones. Manufacturers typically offer longer warranties to instil confidence in the efficiency and dependability of new batteries. 
  • Variable quality and performance: The quality and performance of reconditioned battery packs can vary greatly based on the refurbishment procedure and the experience of the technician or company conducting the reconditioning. 
  • Potential compatibility issues: Reconditioned battery packs may not be compatible with all devices or require special adapters or modifications.
  • Unknown battery history: When you purchase a reconditioned battery, you typically have limited or no knowledge of its past. You need to find out how the battery was previously utilised, charged, or maintained. 

Disadvantages 

  • High costs for consumers: One significant disadvantage of FiT’s is that they can increase consumer energy costs. Typically, these schemes assure a fixed payment rate for renewable energy producers.
  • Budgetary constraints for governments: Government budgetary constraints implementing FiT schemes can strain budgets. Governments must pay subsidies at the agreed-upon rates as the number of renewable energy producers participating in FiT schemes increases. 
  • Market distortion: The FiT scheme can lead to market distortion by artificially guaranteeing prices for renewable energy. This may inhibit renewable energy market competition and innovation.
  • Risk of unsustainable costs: Typically, FiT rates are determined based on forecasts of future energy costs and technological advancements. 

The future of feed-in tariffs 

In the UK, the future of feed-in tariffs needs to be revised. Rates have been drastically reduced for new installations. However, feed-in tariffs could make a comeback if the UK government decides to reinstate more advantageous rates to encourage the adoption of renewable energy. 

With the quickly declining prices of solar panels and energy storage, feed-in tariffs may again be a viable policy option. They can accelerate the UK’s transition to renewable energy if structured properly. 

Future revisions may reinstate feed-in tariffs at rates that compensate homeowners fairly and keep energy supplier costs reasonable. 

Final Thoughts 

Feed-in tariffs are an excellent incentive for households and businesses to generate renewable electricity using solar, wind, and other technologies. Due to the fixed rates, people are confident they will recoup their investment over time. 

Feed-in tariffs are a massive help for low income families, educate yourself and you could find a Feed-in tariff thats right for you.