Feed-in Tariff (FIT) vs Export Tariff - what’s the difference?
The Feed-in Tariff (FIT) scheme and export tariffs both compensate renewable energy producers. However, they do vary in purpose, structure, and setup.
But what happens if you have FIT and also want an export tariff?
This article will help you understand the differences between the two and how that impacts your FIT payments.
Feed-in Tariff (FIT) scheme
The Feed-in Tariff scheme ended on April 1st 2019. If you are currently on the scheme, you will be unaffected by its closure and will continue to receive payments for the installation's eligibility period. It will not take new applications.
If you have moved into a property with solar panels and are unsure whether you have FIT, you can contact consumeraffairs@ofgem.gov.uk, and they will be able to advise you.
The FIT scheme is attached to the installation at the property, not to the initial owner.
Purpose
The FIT scheme was a government programme created to encourage investment in renewable technologies, such as solar panels and wind turbines. It was open to both individuals and businesses.
How it Works
Under the FIT scheme, you are paid for the energy you generate (even if you don’t use it all).
Customers on the scheme receive fixed payments for energy generated from installed systems such as Solar PV, batteries and wind turbines. You will also be given an export payment if you export energy back to the grid.
You can read about how FIT payments are calculated here.
Key Benefits
It’s ideal for energy producers who want predictable returns from their renewable energy systems. The key advantage is that the rate per unit of energy is guaranteed for the duration of the contract.
Export Tariffs
Most tariffs you’ve encountered before are ‘import’ ones, charging you based on the energy you’re importing from the grid to power your home. Our export tariffs pay you for electricity you export to the grid - energy that's usually generated with solar panels.
Get acquainted with our export tariffs!
Purpose
An export tariff compensates individuals or businesses for the excess electricity they generate and export back to the grid.
How it Works
You are paid for the energy you don’t consume. This will be based on information we get from your smart meter. The rate you are paid will vary based on the energy supplier and tariff you choose.
Key Benefits
The rate you receive on an export tariff may be higher than your FIT payments; however, it primarily benefits those who produce more energy than they use and are looking to capitalise on the surplus.
I already have FIT, should I apply for an export tariff?
As we have explained, your FiT payments are divided into two parts: generation payments and export payments.
If you would like an export tariff alongside your FIT, you won't be able to retain your FIT export payments. This is because the export tariff will cover that portion, and you can't be paid twice for the same exported energy.
However, you will still be able to receive your FIT generation payments.
When deciding between keeping your FIT export payments or relinquishing them in favour of export tariff credits, you should consider the following factors:
- Energy Consumption:
- If you consume most of the energy you produce, a FIT scheme might be better, as it ensures a fixed income for all the energy you generate.
- If you generate more energy than you use, an export tariff could be a good way to sell the excess to the grid and earn money from it.
- Predictability vs. Market Flexibility:
- FIT payment rates are fixed for a set period, making it ideal for long-term financial planning.
- An export tariff can be more volatile, as rates can change based on changes in wholesale costs.
- Investment in Technology:
- The FIT scheme is now closed, so if you are considering investments in additional systems, an export tariff may provide a stronger incentive, depending on your setup and the available tariffs.
What happens to my FIT payments if I choose to apply for an export tariff with Octopus?
When you sign up for an Octopus export tariff, you will be required to opt out of your deemed export payments from your existing FiT supplier (but there’s no requirement to switch your FiT contract to Octopus).
You will still be able to receive your FIT generation payments.
There could be a gap in your export payments between the end of your FIT export payment and the start of your export tariff payment.
What happens if I’m on FiT 50% Deemed?
50% Deemed was one option under FIT for getting paid for your export. This is often the case where an export meter was not fitted, and so it was assumed that 50% of the solar energy generated would be exported (the other 50% being consumed). This is calculated from the installed potential output of the solar panels at the time of installation.
You may find you are still better off keeping the Deemed 50% than switching to Outgoing - for example, if you are exporting only 20%, or if the solar panels aren’t optimally oriented to supply the potential output or have deteriorated over several years.
As the FIT Export rate is now 5.38 pence and our flat rate is 15 pence, then you are better off with Outgoing if (average over the year) you export more than around 50% of the installed capability.
What about SEG (Smart Export Guarantee)?
The Smart Export Guarantee (SEG) is a new scheme that came into force on 1 January 2020, requiring energy suppliers to purchase electricity exported by customers. Fortunately, we’ve been doing that ever since our Outgoing Octopus launch.
This follows the same principles as other export tariffs - you can’t have export payments under SEG and still receive FIT export payments.
You can read more about the Smart Export Guarantee on Ofgem's website.
I have more than one installation. I have FIT on one, and would like to get export tariff for the other. Is this okay?
You can 100% sign up for an export tariff if you have FIT and have had another installation carried out.
However, you will very likely still need to give up your FIT export payments in favour of the export tariff payments, even if you think your new or additional installation is unrelated.
This is because your FIT installation and any additional installations, whether new solar panels or a wind turbine, all run through the same Import MPAN (Meter Point Administration Number). It would therefore not be possible to differentiate exported energy from each installation, and you would still be at risk of being credited twice for the same energy.
But you can still retain your FIT generation payments.
If you would like us to check this for you, please get in touch.
Published on 31st January 2022 by:
Hey I'm Constantine, welcome to Octopus Energy!
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