Latest DECC Feed-in Tariff News
The big industry news this week is that DECC has undertaken its latest review of the Feed-in Tariff Scheme, the Government’s subsidy scheme for generation of renewable electricity from small scale installations, and yesterday published an open consultation on their findings. This review was expected as the UK is obliged to consult on the performance of the Feed-in Tariff Scheme every three years, with the last review taking place in 2011/2012. As part of this review DECC are also consulting on a range of cost control measures.
The Government reiterates its commitment to meeting EU renewable energy targets set for 2020. However it seems the UK have already met projections, as set out in the 2012 FiTs Review for the deployment of anaerobic digestion, wind, hydropower and expect to meet the deployment target for solar by the end of 2015/2016.
There are two key proposals being considered as part of the consultation to take effect 1 January 2016:
1. Revised generation tariffs in order to control value for money
2. Cap on new FiT expenditure of £75m-£100m from 2016 to 2018/2019 in order to control costs
Revised generation tariffs
|Proposed Tariff bands for January 2016
|Proposed Tariffs for January 2016 (pence/kW)
|Current Tariff bands from 1 October 2015
|Current Tariffs from 1 October 2015 (pence/kW)
Initially in 2010 the generation tariff levels were set to provide a return of 5-8% with some achieving more but not exceeding 12%. Following the 2011/2012 review the revised tariffs were set to provide a return between 4-8% and not exceeding 13%. The tariffs proposed in this consultation are generally set to provide a rate of return of between 4% and 9% for different technologies based on available information.
Cap on FiT expenditure
The proposal is that the FiT scheme is limited to a maximum overall budget of £75m-£100m from January 2016 to 2018/2019. The idea is that this budget is enforced via deployment caps and will have an amended degression mechanism. After this period the generation tariff will be phased out for new applicants however the export tariff will be retained. If, during the consultation period, data indicates that deployment caps will not prove effective in controlling costs, DECC propose ending generation tariffs for new applicants or reduce the size of the remaining budget as soon as possible ie. January 2016.
From Jan 2016 there will be a quarterly default degression and in addition to that there will be a contingent degression of 5% when deployment exceeds projections across a band and a further 10% degression when the cap is reached for technologies.
The consultation period closes on 23rd October and the full DECC consultation report can be read here