How Solar Feed-In Tariffs Changed and What It Means for Lancashire Homeowners

The previous export scheme (FIT) scheme closed to new applicants on 31 March 2019, but homeowners in Lancashire who installed solar panels under FIT continue to receive inflation-linked, tax-free payments for 20 years from their installation date. Depending on when they signed up, these payments range from around £400 to £900 per year – a substantial income on top of the electricity savings. For new installations, the replacement scheme (the export tariff) pays significantly less, but falling panel costs and the 0% VAT make solar still financially attractive. Here is the full picture.

Understanding the difference between FIT and the current incentives is important whether you are a Lancashire homeowner already receiving FIT payments (and want to know how long they last and what to expect), or you are considering a new solar installation and want to understand the current financial case.

The previous export scheme: What It Was

The previous export scheme was introduced in April 2010 as a government incentive to encourage households to install solar panels. It provided two types of payment:

Generation tariff: A payment for every kWh of electricity your panels generated, regardless of whether you used it yourself or exported it. In the early years, this was extremely generous – up to 43.3p per kWh for systems installed in 2010-11. By the time the scheme closed in 2019, the generation tariff had reduced to around 3.7p per kWh for new installs.

Export tariff: An additional payment for electricity exported to the grid, typically 5.24p per kWh. Before smart meters, the export was deemed (estimated) at 50% of total generation rather than actually measured.

Both payments were guaranteed for 20 years from installation, linked to the Retail Price Index (RPI), and tax-free. This made early solar installations extremely lucrative. A Lancashire homeowner who installed a 4kW system in 2012 at a generation tariff of 21p per kWh is still earning roughly £700-£900 per year in FIT payments alone (after RPI increases), on top of electricity bill savings.

If You Already Have FIT: What to Know

If you installed solar panels in Lancashire under the previous export scheme, here are the key points:

Your payments continue for 20 years total. If you installed in 2012, your FIT payments continue until 2032. If you installed in 2018, they continue until 2038. The payments do not stop early (unless you breach the scheme conditions).

Payments increase with RPI. Your generation and export tariff rates increase each year in line with the Retail Price Index. With RPI running at 3-5% in recent years, your payments have increased noticeably. Check your annual FIT statement to see the current rate you are being paid.

You can switch FIT licensee. Your FIT payments are administered by a FIT licensee (usually your electricity supplier at the time of installation, or a specialist company). You can switch to a different licensee if you want, for example if your original supplier has gone bust (several have). Your entitlement does not change when you switch.

FIT transfers with the property. If you sell your home, the FIT entitlement transfers to the new owner. This adds real value to your property. A home with 10+ years of FIT payments remaining is worth measurably more to a buyer. Our guide to selling a home with solar panels in Lancashire covers how to maximise this value.

Consider adding a battery. If you installed solar under FIT and your export is still deemed (not measured by a smart meter), adding a battery can increase your savings. You store surplus electricity and use it in the evening instead of buying from the grid, while your FIT generation payment continues regardless. Our guide to solar battery storage in Lancashire explains the costs and benefits.

The export tariff: What Replaced FIT

From January 2020, the export tariff replaced the previous export scheme for new solar installations. The export tariff works differently:

• There is no generation tariff. You are not paid for generating electricity – only for exporting surplus to the grid.
• Energy suppliers with 150,000+ customers must offer an export tariff tariff, but they set their own export rates. There is no minimum rate set by government.
• You need a smart meter (SMETS2) to measure actual exports.
• SEG rates vary widely: from 1p to 15p per kWh depending on the supplier and tariff type.

The best export tariff rates in 2024 include Octopus Energy’s Agile Export (variable, averaging 10-15p per kWh with peaks much higher), Octopus Fixed Export (around 15p per kWh), and several other suppliers offering 4-8p per kWh. The difference in annual income between the best and worst export tariff tariffs can be £200-£400, so shopping around is essential.

How FIT and export tariff Compare Financially

Here is a comparison for a 4kW solar system in Lancashire generating 3,400kWh per year, with 50% self-consumption:

Early FIT installation (2012, 21p generation tariff):

• FIT generation payment: 3,400kWh x 25p (after RPI increases) = £850
• FIT export payment: 1,700kWh x 6.5p = £111
• Electricity bill saving: 1,700kWh x 24.5p = £417
• Total annual benefit: £1,378

New installation in 2024 (SEG only):

• SEG export payment: 1,700kWh x 12p (good tariff) = £204
• Electricity bill saving: 1,700kWh x 24.5p = £417
• Total annual benefit: £621

The FIT system was roughly twice as lucrative. However, solar panels cost far less today. That same 4kW system cost £8,000-£12,000 installed in 2012 (with 5% VAT). Today it costs £6,000-£7,500 (with 0% VAT). So while the income is lower, the upfront cost is also much lower, and the payback period is broadly similar.

Making Solar Work Without FIT

The financial case for new solar in Lancashire now relies more on self-consumption (using the electricity yourself and avoiding buying from the grid) than on export payments. This shift in economics influences how you should design your system:

• Maximise self-consumption: Use heavy appliances (washing machine, dishwasher, tumble dryer) during sunny hours when your panels are generating. Smart plugs and timers help automate this.
• Consider battery storage: A battery captures surplus daytime generation for evening use, increasing your self-consumption from 50% to 75-85%. This means more of your solar electricity displaces expensive grid electricity rather than being exported at a lower rate.
• Get the best export tariff rate: Switch to an export tariff tariff that pays well. Octopus Energy consistently offers the best rates in the market. You can have your export tariff with a different supplier to your main electricity supply.
• Pair with an EV: If you have or plan to get an electric car, charging it with solar electricity provides the highest value per kWh of any use. Free EV miles are worth 7-8p per kWh at minimum (compared to grid charging) and much more compared to petrol.

The Future of Solar Incentives

Several developments could improve the financial case for solar in Lancashire over the coming years:

Electricity prices may continue to rise, making self-consumed solar electricity more valuable. The 0% VAT on solar installations runs until at least March 2027. Government policy on green levies may shift costs from electricity to gas, improving the economics of electric heating and solar combined. And battery costs continue to fall, making storage increasingly affordable.

For Lancashire homeowners, solar panels remain a solid investment in 2024 even without the generous FIT payments of the past. The combination of lower panel costs, 0% VAT, decent export tariff rates and rising electricity prices means the payback period is 9-12 years, with 15-20 years of pure saving after that.

Can I still get the previous export scheme?

No. The FIT scheme closed to new applicants on 31 March 2019. If you did not install solar panels before that date, you cannot access FIT payments. The export tariff is the only export payment scheme available for new installations.

What happens when my FIT payments end?

After your 20-year FIT period expires, you stop receiving generation and export payments. However, your panels continue generating electricity (most systems last 25-30+ years). You can then sign up for the export tariff to receive export payments, and you continue saving on your electricity bill through self-consumption. The panels are fully paid for, so every kWh they produce from that point is pure profit.

Should I get a smart meter if I am on deemed FIT export?

If your export is currently deemed at 50%, switching to a smart meter means your actual export is measured. If you export less than 50% (because you use a lot of electricity during the day), a smart meter could reduce your export payments. If you export more than 50% (because you are out all day), it could increase them. Consider your actual usage pattern before switching. Adding a battery to capture surplus generation is often a better move than getting a smart meter if you want to maximise the value of your FIT system.