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Feed-in tariff changes give hope for community energy projects

Posted by Cathy Debenham on 23 July 2012 at 2:48 pm

Community energy schemes should find it easier to get off the ground as the government has removed some of the barriers that they faced. Changes to the feed-in tariff scheme following the 2B consultation where announced on Friday, and will come into force from 1 December 2012.

Key to the changes is the introduction of 'preliminary accreditation' for community solar PV projects. This recognises that groups need a longer time to plan and get their funding together that individuals do. This is particularly important with the new quarterly degression plan for solar PV. Projects will be able to apply for preliminary accreditation, which will fix their feed-in tariff, at the rate current when they apply, for one year, giving them time to raise the cash.

Community energy projects will also be exempt from the energy efficiency requirement for solar PV on non-domestic buildings. They will still have to get an energy performance certificate (EPC) for the building in question, but it does not matter what band of EPC it achieves.

DECC has also defined a community energy project for the purposes of the feed-in tariff: it is a community interest company (CIC); co-operative society; or community benefit society, with no more than 50 employees. In practice, that means CICs registered at Companies House, and co-ops or community benefit societies registered on the FSA Mutuals Public Register, who can provide their incorporation or registration certificate. Charities are not excluded, as DECC believes that "they should in most cases be able to set up specific purpose vehicles for the purposes of delivering community energy projects that could be classified under the new definition.

DECC acknowledges that there are a range of upfront barriers that won't be solved by these measures. These include planning, scoping and developing the project and getting planning approval. It cites a range of government initiatives to help with these, such as LEAF and the communities revolving fund.

Climate Change minister Greg Barker also recently announced that DECC will be drawing together an community energy strategy document over the coming months.

Upfront funding is a key problem for community energy projects. DECC points out that the Green Investment Bank intends to offer loans at a commercial rate to the sector (when it finally gets off the ground), which is not expected to prove a barrier to projects being eligible for FITs. Big Society Capital, which launched in March, is also expected to play a part in growing a sustainable social investment market in the UK by investing in social investment finance intermediaries, including the Community Generation Fund.

Click on the relevant link to read about the main changes to the feed-in tariff, or to download the full response.

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Comments

3 comments - read them below or add one

mike's carbon revolution

mike's carbon revolutionComment left on: 29 August 2012 at 2:57 pm

Thanks! We're in the early stages of setting a scheme up in my home village and are starting with our school, doctor's surgery and some barns simply because the returns are so much better than for homes. We're currently trying to work out which legal structure to use of the 3-4 allowed by DECC.

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mike's carbon revolution

mike's carbon revolutionComment left on: 28 August 2012 at 2:23 pm

Excellent piece, Cathy! Do you know if a community scheme has to include a domestic building or does this not matter? Mike

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Cathy Debenham

Cathy DebenhamComment left on: 28 August 2012 at 1:48 pm

Thanks Mike. I don't think it does have to include  domestic building. 

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