Feed-in Tariffs (FIT) - Payments and tariffs

What this is about

Ofgem's FIT tariff and payments reference page is a standing guide to how generation and export tariffs work for the roughly 800,000 installations still receiving payments under the Feed-in Tariff scheme. The scheme closed to new applicants on 1 April 2019, but existing generators continue to receive administered tariff payments for their full 20–25 year contract periods — meaning the last FIT payments will not expire until the mid-2040s.

The page matters not for what it changes — nothing here is new policy — but for what it confirms about the structure of a legacy cost that sits permanently on consumer bills. FIT payments are funded through levelisation: the total cost of the scheme is apportioned across all licensed electricity suppliers, who pass it through to customers. This is not a market mechanism. It is an administered price, set by DESNZ, indexed to inflation, and guaranteed for decades. No price signal, no demand response, and no efficiency gain on the part of generators can alter the trajectory of these payments.

Key points

Tariff setting and indexation. Tariff rates are set by DESNZ, not Ofgem. Ofgem administers the scheme and the levelisation process, but the rates themselves are published by the department under the Standard Conditions of Electricity Supply Licence. From FIT Year 17 onwards, annual indexation switched from RPI to CPI. This is a modest reduction in the escalation rate — CPI has historically run 0.5–1.0 percentage points below RPI — but it does not alter the fundamental structure. These are still inflation-linked, government-set prices guaranteed for the life of each installation.

Tariff determination factors. Each installation's tariff depends on technology type, total installed capacity, position in deployment caps, and (for solar PV) whether the generator is classified as a multi-site operator and whether the building met the Energy Efficiency Requirement at the time of commissioning. Solar PV has a unique three-band structure (Higher, Middle, Lower) introduced in April 2012, determined by EPC rating and multi-site status.

Deemed export payments. Installations of 30 kW or below without an export meter receive deemed export payments — export is estimated as a percentage of metered generation rather than measured directly. The deemed export percentage is set annually by the Secretary of State. This is a reminder that a significant portion of FIT export payments are based on estimates, not measurements.

Levelisation mechanism. The total scheme cost is socialised across all licensed suppliers through quarterly levelisation. Suppliers with a higher proportion of FIT generators in their customer base receive payments from the fund; those with fewer pay in. The net cost flows through to all electricity bills. There is no opt-out, no competitive pressure on the payment level, and no mechanism for the cost to fall other than installations reaching the end of their tariff periods.

The RPI-to-CPI switch. The government consulted on changing the indexation basis and confirmed the move to CPI from FIT Year 17. For a scheme with 20–25 year tariff periods, even a small reduction in the annual escalation rate compounds meaningfully over the remaining life. But this is cost management at the margin — trimming the growth rate of a fixed obligation, not addressing the obligation itself.

What happens next

Nothing changes operationally. The FIT scheme is closed, the rules are set, and the payments will continue on their predetermined trajectory until the last installations roll off in the 2040s. The relevant dynamics are:

Declining cost base, slowly. Early FIT installations (2010–2012 vintage) received the highest tariffs. These begin expiring from 2030 onwards. The total annual cost of the scheme will gradually decline as the most expensive cohorts roll off, but the tail is long.

CPI indexation reduces the escalation. Each annual CPI uplift compounds over the remaining 15–20 years of the youngest installations. The cumulative saving versus RPI indexation is material in aggregate but invisible on individual bills.

Levelisation remains a fixed system cost. FIT levelisation is one of several policy costs embedded in electricity bills alongside the Renewables Obligation, Capacity Market, and supplier obligations. These costs are invisible to wholesale market prices and cannot be competed away. They are, in effect, a tax on electricity consumption to fund past policy commitments.

No mechanism for early termination. There is no buyout provision, no renegotiation mechanism, and no way for the system to accelerate the wind-down. The contracts run to term. This is the nature of administered price guarantees: they purchase certainty for generators at the cost of flexibility for everyone else.

The practical implication for anyone tracking GB energy costs: FIT is a known, declining, but irreducible component of the bill stack for the next two decades. The RPI-to-CPI switch was the last policy lever available, and it has been pulled.