A Feed-in Tariff works by paying the owner of an accredited renewable energy system two separate amounts for every kilowatt-hour the system produces: a generation payment on the total output, and an export payment on the electricity sent back to the grid. In the UK, the scheme closed to new applicants on 31 March 2019, but existing contracts keep running for up to 25 years from their registration date.1GOV.UK. Feed in Tariffs Scheme Consultation Closure: Government Response New installations now earn export-only payments through the Smart Export Guarantee, which replaced the FiT export tariff in 2020.
The Two Payment Streams
The generation tariff pays you for every kWh your system produces, whether you use that electricity yourself or send it to the grid. A dedicated generation meter records total output, and your FiT licensee pays against those readings.2Ofgem. FIT Guidance for Licensed Electricity Suppliers V17.3 The rate was locked in on the date your system was registered, so early adopters secured significantly higher per-kWh payments than those who joined closer to the scheme’s closure.
The export tariff pays you separately for electricity you don’t consume and instead feed back to the grid. For most smaller residential installations, the exported amount isn’t physically measured. It is deemed at 50% of your total generation. Larger commercial systems need dedicated export meters that track the real figure. The deemed approach works in the homeowner’s favour when actual self-consumption is below 50%, because you receive export payments on electricity you may have actually used yourself.
The practical effect: every unit of electricity benefits you twice. Once through the generation payment, and again either by reducing your energy bill (if you use it) or earning the export tariff (if you don’t).
Five technology types qualify for FiT accreditation: solar photovoltaic, wind turbines, hydroelectric systems, anaerobic digestion, and micro-combined heat and power up to 2kW electrical capacity.3Ofgem. Feed-in Tariffs FAQ Solar PV dominates the scheme — by the time it closed, panels made up the vast majority of accredited systems.
What a System Needs to Qualify
Eligibility hinges on specific certification and performance standards. Missing any one of them means no payments.
MCS Certification
Both the equipment and the installer must hold active certification under the Microgeneration Certification Scheme (MCS). For solar PV and wind installations up to 50kW, and for micro-CHP installations, an MCS-certified installer must commission the system using MCS-certified products.3Ofgem. Feed-in Tariffs FAQ The resulting MCS certificate is your proof of eligibility when applying to a FiT licensee.
Energy Performance Certificate
Solar PV systems also need a valid Energy Performance Certificate on the building showing a rating of band D or above to qualify for the standard tariff rates. Installations on buildings that fall below this threshold receive a significantly lower tariff, and that reduced rate applies for the full duration of the contract, not just until the building is improved.4GOV.UK. Feed-in Tariffs – Frequently Asked Questions It was one of the most common traps for applicants who installed panels without first checking the building’s energy rating.
Metering
A dedicated generation meter must be installed to track total output. Some systems also need a smart meter capable of recording export data. These meters produce the official readings your FiT licensee uses to calculate your quarterly payments.
How Long Payments Last and How Rates Change
FiT contracts run for 10 to 25 years, depending on the technology and when the system was registered. Solar PV systems accredited before 1 August 2012 received 25-year contracts; those joining after that date got 20-year terms. Micro-CHP systems run for 10 years.5Ofgem. Feed-in Tariffs FIT The specific rate locks in at registration and applies as a baseline for the full contract.
Payments then adjust annually for inflation to preserve their value. Until the 2025-26 FiT year, adjustments were based on the Retail Price Index. Starting from FiT Year 17 (2026-27), all generation and export rates will be calculated using the Consumer Price Index instead.6GOV.UK. Explanatory Memorandum: FITs – Immediate Switch From RPI to CPI Ofgem publishes the adjusted rates each year, with 2026-27 rates due in April 2026.
The switch matters for existing contract holders because CPI has historically run about 0.5 to 1 percentage point lower than RPI. Over the remaining life of a long contract, that gap compounds into noticeably smaller annual increases than the old formula would have produced.
Earlier participants also tend to enjoy higher base rates thanks to a mechanism called degression. The government gradually reduced the rates offered to new applicants as the market cost of panels and turbines fell. Someone who registered in 2010 locked in a far more generous per-kWh rate than someone who registered in 2018, even though both receive the same inflation adjustments.
Tax on Your FiT Income
Generation tariff payments are free from income tax for individuals who produce electricity mainly for use in their own home and aren’t acting in a business capacity.7GOV.UK. Business Income Manual BIM40510 That matters because the generation tariff typically makes up the bulk of total FiT income.
Export payments carry a separate income tax exemption for individuals under Section 782A of the Income Tax (Trading and Other Income) Act 2005.7GOV.UK. Business Income Manual BIM40510 Between the two exemptions, most domestic FiT recipients owe nothing to HMRC. If you generate primarily for commercial purposes or run the system as part of a trade, different rules apply and professional advice is worth seeking.
Getting Paid Each Quarter
Licensed electricity suppliers with FiT obligations, known as FiT licensees, handle the administrative side of the scheme. They are legally required to manage accounts and distribute funds to accredited generators.2Ofgem. FIT Guidance for Licensed Electricity Suppliers V17.3 You don’t have to be a customer of the supplier you choose as your licensee, though some people prefer to keep everything with one provider.
Your main ongoing obligation is submitting meter readings, usually quarterly, through your licensee’s online portal or phone line. Those readings form the basis for calculating your generation and export payments. Once the licensee verifies the figures against your system’s registered capacity, payments are typically issued by bank transfer or as a credit to your energy account within 30 to 60 days.2Ofgem. FIT Guidance for Licensed Electricity Suppliers V17.3
Late or missing readings are one of the most common reasons payments stall. If you don’t submit on time, your licensee may estimate your generation or simply delay payment until actual figures arrive. A calendar reminder for each quarterly deadline saves the back-and-forth of chasing delayed money.
Changes to the System or the Property
Contracts run for decades, so most systems will eventually need repairs or component swaps. Any modification that changes your system’s total installed capacity or declared net capacity has to be reported to both Ofgem and your FiT licensee as soon as possible. That includes upgrading or replacing an inverter with one of a different capacity, or swapping out panels for higher-output models. The change needs to be reflected as an amendment to your accreditation record.8Ofgem. Feed-in Tariff: Guidance for Renewable Installations (Version 10.2) Other changes, such as replacing a faulty meter, also need to be reported to your licensee.
Get permission before making the change. Contact your licensee first, explain what you plan to do, and get confirmation that your payments won’t be affected. You will typically need to provide capacity specifications for the old and new equipment and a commissioning certificate or installer’s note confirming the work.
Contracts attach to the installation, not to the owner. When you sell a home with an accredited system, the contract can transfer to the buyer, who then receives the remaining years of generation and export payments. The transfer involves notifying your FiT licensee of the change of ownership and providing the new owner’s details so the accreditation record can be updated. Gather and hand over the MCS certificate, the generation meter serial number, warranty information, and records of any modifications reported to Ofgem. Flagging the transfer with the licensee early in the sale avoids a gap in payments that is tedious to resolve after the fact.
If You’re Installing Now: The Smart Export Guarantee
The FiT is closed to new entrants, so a system installed today cannot join it. Since January 2020, new renewable installations earn export payments through the Smart Export Guarantee (SEG) instead. SEG is a fundamentally different scheme. There is no generation tariff — you are paid only for electricity you export to the grid, not for your total output.9GOV.UK. Smart Export Guarantee SEG You cannot receive SEG payments if you are already receiving FiT export payments.
The eligible technologies mirror the FiT, with a capacity cap of 5MW for most technologies and 50kW for micro-CHP.10Ofgem. SEG: Guidance for Generators Rates are set by individual suppliers rather than the government and vary widely between them, so shopping around matters. To qualify you need MCS certification for the installation and installer, a smart meter capable of half-hourly export readings, and an export meter point administration number.9GOV.UK. Smart Export Guarantee SEG