The UK Feed in Tariff
The Feed in Tariff (FiT) was introduced to promote small scale renewable generation. This tariff requires licensed Electrical suppliers to pay into OFGEM's levelisation fund. This money is then split between all of the licensed electrical suppliers who then pay the FiT to their customers with renewable generators.
OFGEM is responsible for the administration and DECC is responsible for the legality. The tariff is guaranteed for the period of the tariff up to 20 years and is index linked.
Terms to know when learning about FIT
The Generation Tariff - A FIT Licensee Company which may be Your Distribution Network Operator (DNO) will pay you, the generator, a fixed payment for every kWh generated once an agreement has been arranged.
The Export Tariff - A FIT Licensee Company which may be Your Distribution Network Operator (DNO) will pay you, the generator a fixed payment for every kWh exported to the national grid. This rate again depends on the technology and power produced and is again index linked.
Power Purchase Agreement (PPA) - This is similar to the export tariff but instead of getting a fixed payment for the power exported to the grid directly, a power purchase agreement is agreed with a FiT licensee who will purchase the exported power. These rates tend to be better than the export tariff rates and include additional embedded benefits.
Renewable Heat Incentive (RHI) - The Renewable Heat Incentive (RHI) is a UK Government scheme set up to encourage uptake of renewable heat technologies amongst householders, communities and businesses through financial incentives. It is the first of its kind in the world and the UK Government expects the RHI to contribute towards the 2020 ambition of 12% of heating coming from renewable sources.
Renewable Energy Obligation Certificates (ROCs)
Renewables Obligation (RO) was introduced in 2002 predominantly to provide incentives for the deployment of large-scale renewable electricity in the UK.
The RO requires licensed UK electricity suppliers to source a specified proportion of the electricity they provide to customers from eligible renewable sources. This proportion (known as the ‘obligation’) is set each year and has increased annually.
In the UK there are 3 obligations:
- the RO for England and Wales
- the RO for Scotland (managed by the Scottish Government)
- the RO for Northern Ireland (managed by the Department of Enterprise, Trade and Investment)
- the type of technology it uses (each type falls under a ‘banding level’ indicating the number of ROCs issued for each MWh generated by that technology)
- the amount of electricity it generates
A table summarising the banding levels for the period (2013-17) is available:
Renewables Obligation banding levels: 2013-17 (PDF, 174KB, 2 pages)