A Feed-In Tariff is a government sponsored scheme to encourage the use of renewable energy sources. There are many benefits to the UK becoming much more of a renewable energy economy, and feed-in tariffs are a reward for individuals who choose to do so. Domestic solar panels are the most popular renewable source, although wind turbines are also possible.
This is a payment you will receive simply for generating electricity via renewable sources. Every Kw you generate, whether you use that energy in your home, or feed in to the grid, is paid for at a low level.
There may well be excess energy that you cannot use in your home. This ca be sold back to the grid, for the export tariff. This is the basis of the name "feed-in" tariff. If you feed energy back to the grid, the government will pay you for it.
The generation tariff is designed to increase the saving that a household can make by switching to renewable energy. Money will also be saved on the household's energy bill, but there is often a fairly large investment upfront, sometimes as much as £10,000. The tariffs are designed to make this investment pay back quicker than it might otherwise.
A feed-in tariff (FIT, standard offer contract advanced renewable tariff or renewable energy payments) is a policy mechanism designed to accelerate investment in renewable energy technologies. It achieves this by offering long-term contracts to renewable energy producers, typically based on the cost of generation of each technology. Technologies such as wind power, for instance, are awarded a lower per-kWh price, while technologies such as solar PV and tidal power are offered a higher price, reflecting higher costs.