What happened to the Feed-in Tariff, and what replaced it?

Ask around a boardroom or an estates team, and you’ll still hear people talk about “the feed-in tariff.” They talk as if a new solar installation could sign up for it today. It can’t — that scheme hasn’t accepted new entrants for some years.

The scheme that made 2010s solar economics so straightforward closed a while ago. What replaced it, however, works on genuinely different terms. Those terms are worth understanding properly before you build export revenue into a business case.

What the Feed-in Tariff actually paid for

The Feed-in Tariff (FIT) launched in April 2010. It paid small-scale renewable generators — solar PV among them — in two separate parts. A generation tariff paid a set rate for every kWh generated. This applied whether you used the power on site or not.

An export tariff paid a further, smaller rate for the portion exported to the grid. Suppliers metered this directly on larger sites. For smaller installations without an export meter, though, they deemed it at a flat 50% of generation. Together, these two payments made early commercial solar paybacks look so good.

You earned money simply for generating power. On top of that, you also avoided the electricity costs of using that power yourself.

Why it closed, and what that actually meant

The FIT scheme closed to new applications from 1 April 2019, under the Feed-in Tariffs (Closure, etc.) Order 2018. A narrow grace period allowed exceptions for installations already in progress. That closure, however, applied only to new accreditations — it changed nothing for systems already accredited under FIT. Those installations keep receiving their generation and export payments for the rest of their eligibility period.

That period normally runs 20 years (25 years for systems accredited before 1 August 2012). The tariffs rise each year in line with inflation. If your organisation has an existing FIT-accredited array, that income continues on its original terms. The closure doesn’t touch it retroactively.

What closed was the option for any new solar installation to earn a generation payment at all. That’s the detail that trips people up. The scheme that replaced FIT didn’t replace the generation tariff at all. Instead, it replaced only the export element, and on a fundamentally different basis.

What replaced it: the Smart Export Guarantee

The Smart Export Guarantee (SEG) launched on 1 January 2020. Under SEG, licensed electricity suppliers with a large enough customer base must offer eligible generators a tariff. This pays for the electricity they export to the grid — but there’s no generation payment at all. Your chosen supplier pays you only for what you send back to the network, at whatever rate they’re offering.

The practical mechanics, per Ofgem’s SEG guidance:

	Detail
Eligible technologies	Solar PV, wind, hydro and anaerobic digestion up to 5MW total installed capacity; micro-CHP up to 50kW
Who must offer a tariff	Suppliers with 150,000+ domestic customers (“mandatory SEG licensees”) must offer a SEG tariff and cannot opt out; smaller suppliers may participate voluntarily
Tariff floor	Every SEG tariff must be set above zero — Ofgem sets no other minimum, so rates vary widely between suppliers
Metering	Payment is based on metered export readings — the installation needs a meter capable of recording exports, with half-hourly export data increasingly the norm
How you apply	Directly to your chosen SEG licensee — you don’t have to buy your electricity from the same supplier you export to

This is quite different in character from FIT. FIT rates were government-set and identical regardless of supplier. SEG rates, by contrast, are entirely commercial. Each licensee sets its own tariff, structure and contract terms, provided the rate clears zero.

How SEG actually works for a commercial exporter

For a commercial site, most of the mechanics above are straightforward. Sites already on a metered supply usually have, or can readily get, the export-capable, half-hourly metering SEG payments rely on. Your installer’s MCS certification is the standard baseline most SEG licensees expect for the installation itself. You’ll already need that certification for insurance and funder purposes anyway, regardless of SEG.

The part that actually needs deciding is which licensee to export to, and on what terms. That choice is entirely commercial — unlike the fixed rate FIT once guaranteed.

A few things specific to commercial exporters are worth flagging:

• You are not tied to your import supplier. A generator can export to one supplier’s SEG tariff while buying its electricity from a completely different one — so a strong import contract elsewhere doesn’t rule out shopping around on export.
• Self-consumption still usually beats export. SEG rates sit well below what most commercial tariffs charge to import electricity, so a system sized and used to maximise on-site self-consumption will typically deliver a better return than one sized to maximise export volume.
• Some tariffs bundle import and export. A handful of suppliers offer a premium SEG rate only if you also buy your import electricity from them — worth weighing against a standalone export deal with a different supplier, on the combined economics rather than the headline export rate alone.
• Contract terms vary by supplier, not by regulation — length, whether the rate is fixed or tracks a wholesale/market index, and notice periods to switch are all set by the individual licensee, not Ofgem.

How to compare SEG tariffs properly

Ofgem sets no fixed rate and no standard contract structure. As a result, comparing SEG tariffs is closer to comparing business energy contracts than to checking a published government rate. Before signing anything, it’s worth working through:

• Fixed versus variable. A fixed rate is predictable for modelling; a variable or index-linked rate can outperform it if wholesale prices rise, but adds uncertainty to a payback calculation.
• Contract length and exit terms. Some tariffs run rolling monthly, others lock in for a year or more — check the notice period before you’re free to move if a better rate appears elsewhere.
• Whether it’s tied to your import supply. Work out the combined cost of import plus export under a bundled deal against the best standalone export tariff you can get elsewhere; the headline export rate alone can mislead.
• Metering requirements and who pays for them. Confirm the supplier’s metering requirement and whether your existing meter already qualifies, or whether an upgrade is needed and who covers that cost.
• Whether the supplier is a mandatory or voluntary licensee. Ofgem publishes the current list of SEG licensees; mandatory suppliers are guaranteed to offer a tariff, but that doesn’t mean their rate is the most competitive one on the list.

Rates move with the market, and suppliers add or change tariffs regularly. Because of that, check the current Ofgem list of SEG licensees at the point you’re ready to sign. Don’t rely on a rate quoted in an article that may be months old by the time you read it.

Where this fits

Export revenue is one input into a much larger set of numbers — self-consumption, tariff avoidance, capex and payback. It’s easy to either overstate its contribution, or leave it out of a model altogether. Are you weighing a new commercial installation? If so, you’ll want the export assumption tested properly against your own consumption profile, not a generic estimate.

That’s exactly the kind of detail our energy and ROI modelling service is built to get right. For the wider terminology — G99, DNOs, capital allowances and more — our glossary has plain-English definitions. It covers the terms that come up alongside SEG in most commercial solar conversations.