What was the Feed-in Tariff rate for micro-CHP?

The scheme itself is closed. It shut to new applications on 1 April 2019, barring some exceptions in response to disruption caused by COVID-19, and no new micro-CHP unit can now be accredited³. What remains is a legacy: installations already accredited continue to receive payments, and micro-CHP carries a maximum eligibility period of 10 years, the shortest support window in the scheme⁴.

The technology never became a meaningful part of the scheme. Ofgem's quarterly reports exclude micro-CHP from capacity totals because it makes up less than 0.002% of total installed capacity, and the scheme lifetime figure is put at less than 0.01%⁶. For a household weighing micro-CHP today, the Feed-in Tariff is history rather than an available income stream.

What the Feed-in Tariff was and how it paid generators

The Feed-in Tariff was a government scheme designed to promote the uptake of small-scale renewable and low-carbon electricity generation technologies⁷. Installations could have a capacity of up to 5 megawatt, or 2 kilowatt for Micro CHP, and generators using solar PV, wind, hydro, anaerobic digestion and fossil fuel-derived combined heat and power were able to apply, subject to eligibility requirements⁷.

It worked as a levy-funded support mechanism rather than a grant. The scheme was funded by a levy paid by electricity suppliers, and its purpose was to incentivise small-scale production¹⁰. For every unit of electricity generated, the supplier paid the generator a certain tariff, which is the mechanism that made the scheme attractive to households: a revenue stream attached to generation rather than a one-off capital payment¹¹.

Payments came in two parts. The generation tariff paid a sum based on the total amount of electricity generated, and the export tariff paid a smaller amount loosely based on how much electricity was exported back to the grid⁹. The generation tariff was paid for every kilowatt hour produced, whether the owner used it or not, which meant self-consumed electricity earned twice over: once by displacing a purchase and once through the tariff¹².

Tariff rates were adjusted each financial year in line with the Consumer Price Index, applying from FIT Year 17, so the value of an accredited installation's payments was indexed rather than fixed in cash terms². The scheme also had a fuel poverty dimension: the fuel poor who install small scale generation benefit from lower fuel bills as well as a revenue stream from their electricity generation and export¹³.

Micro-CHP's place in the scheme: less than 0.01% of capacity

Micro-CHP was a rounding error in a scheme dominated by solar PV. Ofgem's quarterly reporting excludes it from capacity totals because it makes up less than 0.002% of total installed capacity, and the scheme lifetime figure is put at less than 0.01%⁶. An earlier quarterly report used the same formulation at less than 0.002% of TIC¹⁴.

The scale of the scheme overall makes that share stark. Of accredited installations on the scheme, 99.21% are microgenerators, accounting for 53.78% of installed capacity, with the remaining 46.22% coming from larger installations⁵. Non-domestic commercial installations accounted for only 3.94% of accreditations but contributed 42.52% of capacity⁵. Micro-CHP sat outside even the microgeneration story: apart from micro-CHP, solar PV installations are on average smaller than installations of other technology types, which is the scheme's own way of noting that micro-CHP units were unusually small relative to other technologies⁷.

The small share was not for want of budget headroom. Even at full deployment to the previous cap of 30,000 units, mCHP would only occupy 15% of the overall FIT budget, according to a consultation response¹⁵. The constraint was deployment, not the cap.

Regional reporting shows the same thinness. For some regions, micro-CHP, anaerobic digestion and hydro figures are not included in the breakdown due to low numbers of the technologies¹⁶. Where a technology is too rare to publish by region, it is too rare to shape a national scheme.

How micro-CHP payments were calculated under the tariff

The calculation rested on two components and one unusual timing rule. The generation tariff paid for every kilowatt hour produced, whether used on site or not, and the export tariff paid a smaller amount loosely based on how much electricity was exported back to the grid⁹. For a micro-CHP unit, which runs when there is heat demand rather than when the sun shines, that generation profile is tied to the heating season.

The timing rule is the distinctive part. Tariff periods for micro-CHP installations are six monthly, against quarterly periods for all solar photovoltaic, wind, hydro and anaerobic digestion installations¹. A six monthly period means fewer rate changes across a year and a longer window in which a given rate applies, which matters for a technology whose output is concentrated in winter.

Where capacity changed, the tariff did not follow it down. If generating capacity is reduced, the tariff rate remains as it is and is not recalculated based on the reduction in capacity, for an installation registered on the Central FIT Register¹⁷. That protects the rate on a partially decommissioned or derated unit, though the payments themselves fall with output.

The scheme also applied reductions in specific circumstances: the FiT level is reduced by 10 per cent for installations on multiple sites, meaning 25 or more¹⁸. That is a multi-site rule rather than a domestic one, but it shows the scheme's rate was not a single flat number applied uniformly.

What the FiT legacy means for micro-CHP owners today

For an accredited micro-CHP installation, the scheme still operates. The FIT scheme is now closed to new applications, but still operates for existing arrangements, and closure does not affect installations which are already accredited³. Installations already accredited under the scheme will continue to receive payments, and those who already receive payments under the scheme will continue to do so³.

The support period is the key limit. All micro-CHP installations have a maximum eligibility period of 10 years, shorter than the 20-year period often associated with the scheme⁵. Ofgem's quarterly reporting has already recorded the consequence: the expired installations are all micro-CHP technology types which are eligible to receive support for 10 years⁴. Total active accreditations fell slightly in SY12 for the first time due to some micro-CHP installations reaching the end of support⁷. In other words, micro-CHP units are ageing out of the scheme ahead of the rest of the register.

Switching supplier does not disturb the payments. Your old supplier is required to continue making FiT payments, so the arrangement survives a change of energy supplier²¹. Payments continue until the end of the initial period, which for micro-CHP is the 10-year maximum eligibility period rather than a 20-year term⁵.

Accreditation status is checkable. Ofgem's published statistics represent installations that have completed the FIT accreditation process and are on the Central FIT Register, and the installation report is based on installations registered on the Central FIT Register¹⁶. A generator can confirm their position through that register and through the supplier administering the payments.

Why micro-CHP was such a small share of the scheme

The short answer is that the technology never reached the deployment the scheme was designed to reward. The Feed-in Tariff was built to incentivise small-scale production, and micro-CHP was eligible from the start, but eligibility is not the same as uptake¹⁰.

The numbers show the gap between the two. Micro-CHP is excluded from capacity reporting at less than 0.002% of total installed capacity in the quarterly figures and less than 0.01% across the scheme lifetime⁶. Even the budget analysis found that at full deployment to the previous cap of 30,000 units, mCHP would only occupy 15% of the overall FIT budget, which suggests the constraint was never money¹⁵.

Attrition compounded the thin deployment. In total, 243 micro-CHP installations with a combined capacity of 242.8 kW during SY12 and 83 installations with a combined capacity of 89.1 kW during SY13 became inactive and will no longer be eligible for FIT payments⁷. Those are small absolute numbers, but they represent a meaningful slice of a technology that never had many accredited units to begin with.

The 10-year support period accelerated the effect. Because all micro-CHP installations have a maximum eligibility period of 10 years, units accredited in the scheme's early years reached the end of support while solar PV installations were still being paid⁵. Total active accreditations fell slightly in SY12 for the first time due to some micro-CHP installations reaching the end of support⁷.

For a household considering micro-CHP now, the practical position is that the Feed-in Tariff is not an available route. The scheme closed to new applications on 1 April 2019, barring some exceptions in response to disruption caused by COVID-19, and the successor arrangements for exported electricity sit outside it³. Micro-CHP's economics today rest on the heat and power it produces on site, not on a legacy tariff.