Feed-in tariffs in the UK

In addition to the Renewables Obligation existing since 2002 that requires electricity suppliers to
source a specified proportion of their electricity from (primarily larger) renewable energy sources, the
UK1 introduced a new supporting scheme for smaller renewable electricity systems with the Energy
Act of 2008. A FIT scheme became effective from April 2010 for all new qualifying installations,
including those that had been installed after July 15, 2009. Older systems were only eligible for a
reduced FIT rate if they had been registered under the Renewables Obligation by March 31, 2010. The
FIT scheme replaces the Renewables Obligation as the main mechanism of support for RE installations
with a maximum capacity of 50 kW. Operators of installations over 50 kW to 5 MW have a one-off
choice of applying under the FIT or the Renewables Obligation. The FIT is administered by the energy
regulator Ofgem.
A FIT is paid for every kilowatt-hour that is generated from selected renewable energy sources as well
as by micro Combined Heat and Power (CHP) units, be it for own use or for export to the grid. Any
kilowatt-hour fed into the grid will get an additional bonus payment. The FIT can be applied for all RE
facilities using biogas and for wind, hydropower and solar PV systems with a maximum capacity of 5
MW2. It is differentiated according to the size (capacity) of the plant (see Table 1). In addition, the FIT
for PV installations varies depending on other factors: a lower rate is paid, if the power is supplied to
a building without an energy efficiency certificate in the band A to D; a medium rate applies, if the
operator owns 25 or more PV installations registered for FIT payment. Specific site conditions, e.g.
wind speed or solar irradiation, are not taken into account. FITs are paid for 20 years for all
technologies and are adjusted annually by the retail price index.3



generation tariff
generation tariff
≤ 4 kW
> 4 – 10 kW
>10-50 kW
>50-150 kW
>150-250 kW
>250 kW – 5 MW
Stand-alone systems
≤100 kW
>100-500 kW
> 500-1,500 kW
>1.5 MW – 5 MW
Table 1: FIT levels for solar PV and wind systems registered in the second half of 2013 (only standard rates); currency
exchange rates of Oct. 8, 2013

The bonus payment for electricity exports is set as a “floor price” in the legislation, which is also linked
to the retail price index and is currently 4.64 p/kWh (US$-ct 7.4/kWh) for all technologies.4 Any
operator can opt out of this fixed pricing scheme and negotiate a better tariff with his electricity
supplier, who most certainly will only accept this option for larger systems. As long as smart meters
are not yet common, exports are deemed to be 50% of all electricity generated for PV and wind



Excluding Northern Ireland.
For community owned projects the upper level has been raised to 10 MW in July 2013.
It was 25 years for solar PV systems installed before August 1, 2012.
Until March 31, 2014.

Feed-in tariffs in the UK


installations up to 30 kW. If exports are considered to be higher, operators can use separate export
Customers using solar PV or wind with up to 50 kW need to ensure they use Microgeneration
Certification Scheme (MCS) certified equipment installed by an MCS certified installer.5
Systems operating under FITs have to be registered with Ofgem after installation and an application
has to be submitted to any electricity supplier participating in the FIT scheme (FIT Licensee) out of a
list of currently 16 different companies (note that not all suppliers active on the UK market offer FITs).
The extra costs incurred, including administration costs, are spread equally among all FIT Licensees
according to their market shares; they can recover the payments from their customers. It is predicted
that the extra costs by 2020 will be in the range of 10 Pounds (US$ 16) annually for the average
customer. The main supplier of electricity to a certain facility does not have to be the same company
that receives the generated RE electricity.
Default degression levels have been set legally for the different technologies: 3.5% quarterly for solar
PV and 5% annually for all other RE electricity. Those levels can be lowered or increased, depending
on the deployment rate of each technology, e.g. for PV systems of up to 10 kWp the default corridor is
100-200 MW quarterly; for lower installation rates the degression is 0, for installations above 200 MW
the degression is doubling for every additional 50 MW, up to a maximum of 28%6. Furthermore, the
government may review any tariff levels on an annual basis to ensure that they are achieving the
desired outcomes.
The cumulative capacity of all RE systems stimulated by the FIT scheme has reached about 1,800 MW
by September 2013 (see Figure 1). About 70% of the capacity has been installed in the domestic sector.

Figure 1: Cumulative capacity installed within the FIT scheme until July 2013

With more than 350,000 systems and a total of almost 1,500 MW until the end of 2012, solar PV is the
most successful technology (see Figure 2Figure 1). The large majority of those systems is installed in



www.microgenerationcertification.org. The MCS is an internationally recognized quality assurance scheme, supported
by the UK Department of Energy and Climate Change. MCS standards are predominantly based on international and
European standards already in existence.
In fact, the deployment rate for this capacity range of PV systems has been continuously below 100 MW within a
quarter year until September 2013, except in the very first period of May to July 2012.

Feed-in tariffs in the UK


the domestic sector. Despite those results, it had been previously anticipated that even a higher
capacity rate would be achieved. And in 2013 the rate of capacity increase slowed down considerably.

Figure 2: Capacity share and ownership of different technologies installed under the FIT scheme until July 2013

Ofgem, Feed-in Tariff: Guidance for renewable installations (Version 5; 19 April 2013)
Website of Feed-in Tariffs Ltd.: www.fitariffs.co.uk

Detlef Loy, Loy Energy Consulting, Berlin/Germany, October 2013