What FITs (Feed in Tariff) Payments Are

FITs (Feed In Tariff) payments are the common name for the UK incentive scheme to install PV (Photo Voltaic) solar panels. The aim of the incentive is to reduce the UK carbon footprint.

The UK Government has made the payments of FITs, by the electricity suppliers (for example E.ON, EDF and Npower, a condition of getting a distribution licence.

The UK Government makes the electricity suppliers pay FITs, in effect the UK Government is promising other people’s money – the electricity supplier’s money (the customer’s money).

How Much Are FITs Payments?

As of October 2011 FITs payments are:

  • 43.3 pence per KWh (Kilo-Watt/hour) of electricity produced by the solar panels.
  • 3.1 pence per KWh of electricity fed back in to the National Grid.
FITs Payments Explained

What FITs Are Paid For

Owners of PV solar panels receive\save money in 3 different ways:

  • Payment for each unit of electricity the solar panels produce.
  • Reductions in the electricity bill for using the electricity the solar panels produce rather than electricity from the National Grid.
  • Payment for each unit of electricity the solar panel owner does not use, the excess electricity that is ‘fed in’ to the National Grid.
    • The electricity the solar panels generate cannot be stored (too expensive), if it is not used when it produced it is fed back, or fed in, to the National grid.

Strictly speaking, FITs payments mean the payments for the excess electricity the owner does not use, the electricity that is fed in to the National Grid (third bullet point above).

The term FITs payments, through the natural usage of language, is now taken to mean ALL payments and savings from PV solar panels. When people says FITs payments you can be 99% sure they mean:

  • Payment for each unit of electricity the solar panels produce.
  • Reductions in the electricity bill for using the electricity the solar panels produce rather than electricity from the National grid.
  • Payment for each unit of electricity the solar panel owner does not use, the excess electricity that is ‘fed in’ to the National grid.

The image explains FITs payments.