The Feed-in Tariff (FiT) scheme, which previously incentivised renewable electricity generation across the UK, including Scotland, is no longer open to new applications.
Understanding the Feed-in Tariff (FiT) Scheme
The Feed-in Tariff (FiT) was a UK Government initiative designed to incentivise homeowners and businesses generating electricity from renewable sources, such as solar panels, wind turbines, and hydropower. Launched in April 2010, its primary goal was to encourage the uptake of small-scale low-carbon electricity generation.
Under the FiT scheme, participants received payments in two main ways:
- Generation Tariff: A fixed payment for every unit (kWh) of renewable electricity generated, regardless of whether it was used on-site or exported to the grid.
- Export Tariff: An additional payment for every unit of electricity exported back to the national grid.
This scheme provided a significant financial incentive, making renewable energy installations more attractive and helping the UK meet its carbon reduction targets.
Closure of the FiT Scheme in Scotland
The Feed-in Tariff scheme officially closed to new applications on 31 March 2019. This closure applied across the entire UK, meaning new installations in Scotland are no longer eligible for FiT payments.
It is crucial to note that if you installed your renewable energy system and registered for the FiT scheme before this cut-off date, you will continue to receive your agreed-upon payments for the remainder of your contract period (typically 20 or 25 years). The scheme's closure only impacts new installations.
What Replaced the Feed-in Tariff?
Following the closure of the FiT scheme, a new framework was introduced to continue supporting small-scale renewable electricity generators: the Smart Export Guarantee (SEG). Launched on 1 January 2020, the SEG differs significantly from FiT by focusing solely on payments for exported electricity.
How the Smart Export Guarantee (SEG) Works in Scotland
The SEG requires larger electricity suppliers (those with more than 250,000 domestic customers) to offer a tariff to homes and businesses that export renewable electricity back to the grid.
Key features of the SEG include:
- Export-Only Payments: Unlike FiT, SEG only pays for the electricity you export, not for the electricity you generate and use yourself.
- Supplier-Set Rates: Energy suppliers are mandated to offer at least one SEG tariff with a rate above zero. However, the specific rates offered can vary significantly between suppliers, allowing for competition and potentially better deals.
- Smart Meter Requirement: To benefit from SEG, you need to have a smart meter installed, as it accurately measures the amount of electricity exported.
- Eligibility: The SEG is available for installations of various renewable technologies up to 5 MW capacity, including solar PV, wind, micro combined heat and power (CHP), hydro, and anaerobic digestion, provided they are certified under the Microgeneration Certification Scheme (MCS) or equivalent.
For homeowners in Scotland looking to install new renewable energy systems, the Smart Export Guarantee is now the primary mechanism for receiving payments for surplus electricity exported to the grid. It encourages self-consumption of generated electricity while still providing a financial benefit for excess power.
