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Feed-In Tariffs for Business Energy
All businesses are looking for ways to cut unnecessary costs, making excessively high business energy costs a great place to start. There are a growing number of energy suppliers offering competitive tariffs, including those which supply green energy. Many companies have even made money via Feed-In tariffs, by selling their own surplus green energy back to the grid.
Although the Feed-In tariff scheme has now closed to new entrants, there are still excellent energy deals available. Here, we take a closer look at how the Feed-In tariffs work, whether there are any new options available and how your business can reduce its own energy bills.
How do feed-in tariffs work?
If a business installed its own renewable energy technology, it was possible for any surplus energy to be resold back to energy suppliers. These tariffs were more commonly known as FiT tariffs and were paid to suppliers via a government subsidy, which was introduced as part of the Paris Agreement. The aim of this agreement was to reduce the environmental impact across the globe, by reducing each nations carbon footprint.
What are feed-in tariffs?
The idea of FiT tariffs was to reduce the reliance on energy from outside the UK, which is produced by burning fossil fuels. Instead, the governments aim was to encourage businesses to switch to producing their own green energy via technology such as solar panels and wind turbines. This was encouraged by offering an incentive for the sale of excess energy to the National Grid. Businesses were able to receive grant payments for generating their own renewable forms of energy and also receive an income by sharing excess energy.
The FiT tariffs fall into two possible categories, export tariffs and generation tariffs. Businesses which are signed up to generation tariffs are paid for each kWh of energy produced, whether it is used by the business or sold to the grid. In comparison, export tariffs pay businesses based on the amount of surplus electricity which is sent to the National Grid.
Is there still a feed-in tariff available?
As you can imagine the FiT tariff scheme was extremely popular and it closed to new applications on March 31st 2019. However, if your business installed an eligible renewable energy system before 31 March 2019 and your application was processed for the scheme before 31 March 2020, you will still be eligible to receive payments.
The original goal was for 750,000 businesses to install renewable solar PV systems before March 2020. However, this number was achieved ahead of time, partly due to the reduction in installation costs, which meant the scheme ended a year ahead of schedule.
What has replaced the feed-in tariff?
Although the original FiT tariff has closed, there is a new scheme available known as the Smart Export Guarantee Scheme (SEG). All larger energy suppliers with more than 150,000 customers must offer at least one SEG tariff, with smaller energy suppliers offered a choice of whether to opt into the scheme.
The SEG scheme is open to businesses which have any of the following renewable energy systems installed, a wind turbine, solar PV panels, anaerobic digester, micro combined heat and power, or hydro power. The technology must meet the Microgeneration Certification Scheme (MCS) standards and you must have an AMR or smart meter installed,
which can deliver half hourly meter readings to your supplier. The SEG scheme pays businesses for the surplus energy, which is exported to the National Grid, with payments based on the exact measured amount. The various suppliers set their own tariff rates for SEG payments, so it is worth comparing the options available.
If you are currently participating in the FiT scheme, you will not be able to join the new SEG scheme. The SEG rates tend to be more generous than those offered under the FiT tariff and the new scheme is only available to those with equipment installed after 31 March 2019.
How long do feed-in tariffs last?
Businesses which were able to sign up to the FiT scheme before the deadline will still be eligible to receive payments until their energy production system are typically 20 years old. Although, some businesses will be able to receive payments for a total of 25 years depending on the technology installed and when it was installed.
How can I reduce my business energy bills?
Although the feed-in tariff scheme is no longer open to new applications, it is still possible to join the SEG scheme and the payments available will vary between suppliers. There are no set minimum tariffs under the SEG scheme, so it is important to compare suppliers to ensure your business is paid the most for the surplus energy it produces. To find out more about how we can help you compare energy tariffs to find the most competitive deals, please contact our team today.
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