New Feed-In Tariff Announcement
The Department for Energy and Climate Change (DECC) have released their response to the FIT consultation that closed in October 2015, which can be read in detail here. Nearly 55,000 separate written responses were received, including 2,634 unique ones, plus two email campaigns from Greenpeace and 10:10 and a 27,000 signature strong petition on the UK Government and Parliament website. DECC also received a petition in the form of a papier-mache sun from a London Primary School!
In response to views shared during the consultation, the Government recognised that the tariff cuts and technology bands proposed were not appropriate across all areas, so have amended the proposed FIT rates. From evidence shared in the consultation, DECC also agreed that the original report produced by Parsons Brinckerhoff that was used as the basis for the changes proposed in the consultation, was not based on enough evidence due to limitations in data sources. Because of this and the desire to limit the maximum budget to £100 million, the Government have chosen to revise the tariffs as below:
<50kW Consultation 8.61p/kWh New (from Jan 2016) - 8.54p/kWh
50-100kW Consultation 4.52p/kWh New (from Jan 2016) - 8.54p/kWh
100-1500kW Consultation 4.52p/kWh New (from Jan 2016) - 5.46p/kWh
1500kW+ Consultation 0p/kWh New (from Jan 2016) - 0.86p/kWh
<10kW Consultation 1.63p/kWh New (from Jan 2016) - 4.39p/kWh
10-50kW Consultation 3.69p/kWh New (from Jan 2016) - 4.59p/kWh
50-250kW Consultation 2.64p/kWh New (from Jan 2016) - 2.70p/kWh
250-1000kW Consultation 2.28p/kWh New (from Jan 2016) - 2.27p/kWh
1000kW+ Consultation 1.03p/kWh New (from Jan 2016) - 0.87p/kW
We feel that this is more sensible approach to drop the tariffs more steadily rather than a sudden drop to enable the industry to continue to strengthen and adapt. Plus by reevaluating and having a separate 50-100kW wind band it enables these turbines to not have to compete with larger counterparts. Our next blog post will outline how these changes may impact your wind project.
###Caps However, all new installations applying for FITs from 15 January 2016 will be subject to new caps that mean a maximum of £100 million, for new installations by April 2019, will be divided between technologies and degression bands. If an application misses out on a cap then they will need to wait in a queue for the next cap to open or if there is an underspend will rollover into the next cap quarter. There is a deployment cap in each band for each technology with the popular wind category of 50-100kW being capped at only 0.3MW of deployment per quarter, which equates to approximately 4 turbines per quarter, so not very generous! Whereas significantly more small turbines <50kW can be deployed with capacity allowing for up to 5.6MW or approximately 540 turbines each quarter, which opens the FIT market up to smaller scale wind. This capping is likely to impose challenges for some turbines with no guarantee of support if they do not qualify before the cap is reached. If the cap is reached for a technology band each quarter then the rate will decrease by 10%, with the first cap running from 8th February to 31st March 2016.
###Pre-Accreditation The response also announced that Pre-accreditation (to be discussed in more detail in our later blog) will be reintroduced from 8th February 2016 due to the Government viewing the capping system as an appropriate cost reduction measure that allows Pre-accreditation to continue without cost escalation.
###New Dates In order to implement the new changes in regards to degression and caps, the FIT scheme will be paused for all new applications from 15th January to 8th February 2016. Only those with pre-accreditation before 1 October 2015 (when Pre-accreditation was closed) will be able to accredit to full FIT applications during that period, as no new applications are being accepted. However, any applications during that period will join the queue in readiness for 8th February 2016.