Feed-in Tariffs row defused with proposals for stability ...

Feed-in Tariffs row defused with proposals for stability
The long-running and highly divisive saga over government cuts to the Feed-in Tariffs (FiTs) that it pays for power from small-scale renewables installations - see Energy World February 2012 - reached a quieter phase with a new consultation from the government on the future of the scheme. Previously, the government had been defeated in court actions brought by two solar energy companies over proposed cuts to the tariff rates.
The government has now announced its plans for the future of the FiTs scheme; to make it more predictable, with what it calls transparency, longevity and certainty at the heart of the improved scheme. The reforms are aimed to provide greater confidence to consumers and industry investing in renewable technologies such as solar power, anaerobic digestion, micro-CHP, wind and hydro power. They follow the legal wrangling caused by a surge of solar PV installations in the latter part of last year, due to a substantial reduction in installation costs, which placed a huge strain on the FiTs budget.
The FiTs scheme provides a subsidy, paid for by all consumers through their energy bills, enabling small-scale renewable and low carbon technologies to compete against higher carbon forms of electricity generation.
The government says that the reforms will deliver a better FIT scheme for consumers and communities:
A tariff of 21 p/kWh will take effect from 1 April for domestic-size solar panels with an eligibility date on or after 3 March. Other tariff reductions apply for larger installations.
The Department has listened carefully to feedback on the energy efficiency proposals that it put forward in the consultation last year. Properties installing solar panels on or after 1 April this year will be required to produce an Energy Performance Certificate rating of ‘D’ or above to qualify for a full FiT. The previous proposals for a ‘C’ rating or a commitment for all Green Deal measures to be installed was seen as impractical.
From 1 April, new ‘multi-installation’ tariff rates set at 80% of the standard tariffs will be introduced for solar PV installations where a single individual or organisation is already receiving FiTs for other solar PV installations. This reflects the lower costs of such installations, as they benefit from the economies of scale.
The tariff for micro-CHP installations will be increased to recognise the benefits this technology could bring and to encourage its development.
Reforms will also deliver a better FIT scheme for the industry, says DECC:
In line with the evidence of falling costs for solar PV, DECC is proposing to peg the subsidy levels to cost reductions and industry growth to provide more certainty for future investments - this will ensure that subsidy levels keep in step with the market.
The government will use budget flexibility to cover the overspend resulting from high PV uptake this year, while still allowing £460mn for new installations over the Spending Review period.
Climate Change Minister Greg Barker said: ‘Instead of a scheme for the few, the new improved scheme will deliver for the many. Our new plans will see almost two-and-a-half times more installations than originally projected by 2015, which is good news for the sustainable growth of the industry. We are proposing a more predictable and transparent scheme as the costs of technologies fall, ensuring a long term, predictable rate of return that will closely track changes in prices and deployment.’
Renewable Energy Association Chief Executive Gaynor Hartnell responded: ‘The government certainly needed to take steps to stabilise the Feed-in Tariff and we welcome this consultation. The ultimate aim should be tariffs that deliver a reasonable and stable rate of return and which fall in line with cost reductions in technology. Whether the government has got those calculations right, is another matter. The solar tariffs fall so steeply that by July this year they could be lower than those for wind and hydro. It is a tall order - and solar companies have been vocal in their disbelief. I do think we have seen a change of ambition for solar, however. The government seems to have accepted that it has an important role to play and DECC seems genuinely keen to work with the industry to ensure that it can deliver on its huge potential.’
Meanwhile RenewableUK, the trade association for the wind, wave and tidal industry, expressed concern over proposed new levels for FiTs for small wind turbines. Household-scale wind turbines have had their tariffs reduced by over 40%, while farm and small business-scale turbines have seen cuts of over a quarter, says RenewableUK.