Feed-in Tariffs

The Feed-in Tariff (FIT) provides guaranteed prices for generators of renewable electricity up to 5MW. This mechanism is very effective in engaging land managers and farmers in the 23 EU member states that operate the system.

But there are significant problems, as the halving of the costs of solar installations led to an explosion in installations and a threat to the FIT budget.

Government took action with two emergency reviews of the solar FIT rate, the second of which is still under legal challenge, following two Court cases and an appeal to the Supreme Court by the Government. For more info on this see News, below.

FIT rates for all the other supported technologies are due for review, nominally from the 1 April 2012 (though this may slip). The consultation on the new rates was launched on 9 February 2012.

While the FIT level set for solar was too high, or at least proved to be so very quickly: regrettably the  level at which the previous Government set the FIT for anaerobic digesters was potentially disastrous.

The CLA was contacted by many farmers cancelling long-planned investments in digesters because the returns meant the money could not be justified.

The assumptions made by the Department of Energy and Climate Change (DECC) when setting the tariffs were simply incorrect. Maize silage is not free. Engines driving generators do not last for 20 years without major overhaul costs.

The CLA has given detailed accurate evidence on costs. The returns given in Germany are much higher – as a result 4,500 anaerobic digesters are in use there.

Happily for farmers in Northern Ireland, the NI Government takes a different view: The CLA applauds the Northern Ireland Department of Enterprise Trade and Investment’s proposals for a significant funding increase from the current 2 Renewable Obligation Certificates (worth about 9p/kWh) up to 4 ROCs for Anaerobic Digestion up to 500kW (worth about 18p/kWh) and 3 ROCs up to 5MW (worth about 14.5p/kWh) from April 2011 and wishes that DECC would take the same view.

In the event the Government were persuaded to raise the FIT for biogas from 30 September 2011, up to 250kW to 14p/kWh, for 250-500kW to 13p/kWh, leaving the over 500kW rate at 9.4p/kW.

The Government has published the Microgeneration Strategy, which may be downloaded here.

Members can find detailed advice about feed in tariffs in our guidance notes.

FIT News

Government moves to end uncertainty about support for solar

On Thursday 19 January 2012the Department of Energy and Climate Change (DECC) laid new regulations before Parliament which will confirm the rates of Feed In Tariff payable to the 1 April 2012. The rates will come into effect on 3 March 2012, whatever the Court decision in respect of the consultation and the original proposed date for reductions in Solar FIT (12 December - which was before the end of the consultation on the rates).

CLA cannot say if installations made before 3 March will get the pre December 12 rate: it depends entirely on the Appeal Court judgment, which may still be some weeks away.

The CLA is still deeply concerned that the amount of FIT budget taken for solar PV will affect the amount left for other technologies, and we are doing all we can to try to ensure that we have a viable FIT for all technologies going forward. This may need further boosts to the FIT budget (We were sorry to note that £103 million of the additional funds that arose from the sale of NFFO contracts were given to Scotland for a new scheme*, as they would have been better as a reserve for FIT).

CLA expects the consultation on the second phase of the FIT review in early February. Happily, the Chief Surveyor has been reliably informed that DECC is minded to include a question on pre-registration for FIT, with or without grandfathering –when the consultation comes out CLA will ask everyone with an interest to respond so that DECC gets as many votes in favour of pre-registration with grandfathering (a guarantee of the rate of FIT at an earlier date in any project) as it has had complaints about the solar consultation (over 2000!).

Solar support slashed (October 31 2011)

The CLA was aghast to read the savage cuts that are proposed, from the advanced cut off date of 12 December 2011 (six weeks from today) that are set out in the Government consultation on the Solar PV Feed In Tariff. Not only will this halve the FIT rate that is payable to those who cannot complete, connect and register their projects by this date, but there is a further 20% cut to be applied to those who install multiple PV projects after 1 April 2012 - which will hit many farmers and land managers as well as councils, housing associations and others who are seeking to provide their tenants with cheaper energy.

The Consultation is available on the DECC website at www.decc.gov.uk/en/content/consultations/fits_comp_rev1/fits_comp_rev1.aspx

CLA members who log in will be able to access the CLA Guidance Notes on renewables, including today's analysis and guidance on the impacts of the changes to solar PV.

Happily, renewables other than Solar PV are not (yet) affected by budget constraints, though the Feed In Tariff is due for a comprehensive review of rates payable (and other terms) for installations that are completed and from 1 April 2012.

CLA defends solar PV

The CLA is lobbying to secure ongoing support for solar PV at both large and smaller-scale.

The CLA responded to the review of large-scale ground-mounted solar photovoltaics (PV) our response to the review may be downloaded here.

The REA has produced a useful fact-checker on solar PV which challenges many of the myths that pervade discussion on the technology. It is available at www.r-e-a.net/info/rea-news/solarfactchecker/

Feed In Tariff RPI rates increase announced

DECC has announced that from 1 April 2011 the export rate paid under the FIT shall be 3.1p/kWh.

All the rates payable (to both new investors and existing generators) will go up by the Retail Price Index (RPI). Existing generators should be sure to get a meter reading on 31 March.