Changes to the feed-in tariff from 1 December 2012
Posted by Cathy Debenham on 23 July 2012 at 3:07 pm
On Friday the Department of Energy and Climate Change DECC announced the changes to the feed-in tariff that will come into play on 1 December 2012. Here are the main points that impact on domestic, community and SME installations.
Changes to tariffs
DECC has capped the rate of generation tariffs. It has set a maximum FIT payment of 21p per kWh, "partly on the basis that the highest PV generation tariff snow 21p". This has hit the smaller wind projects hardest, with a reduction from 35.8p for the smallest wind installation. The smallest hydro band is also impacted. Rates for the largest installations will continue to match the renewables obligation (RO) rates.
In response to very low uptake of the micro-CHP feed-in tariff, DECC has increased the generation tariff from 10.5p to 12.5p per kWh. It has also restructured the banding for hydro installations. By introducing a new band of 100 - 500 kW, with a generation tariff of 15.5p, it hopes to prevent the previous incentive to undersize projects. All tariffs continue to be index-lined to the retail price index (RPI).
Click the link to see the details of the new feed-in tariff rates.
From April 2014 the feed-in tariff (FIT) rates for hydro, wind and anaerobic digestion will degress (reduce) annually. DECC has set a baseline degression rate of 5%, with allowance for a lower rate of 2.5% if installations of a technology fall well below expectations. This lower rate is not available for wind bands from 100kW-1.5MW, or for bands linked to RO tariffs, which will degress at 5% a year, whatever the deployment level.
If deployment is higher than expected, the degression rate can increase to a maximum of 20%. This will be determined on deployment in the previous year, using data from the MCS database and Ofgem's Renewables and CHP database. These measures have been chosen as they should give a more up to date measure than the Ofgem Central FITs register, where there is a time lag in registration.
New tariffs will be published by Ofgem by 1 February every year, based on published annual deployment statistics for the previous year, which will be published on the DECC website from January 2014.
DECC has also introduced a safety net option of six monthly degression to be used in instances of 'extremely high deployment'. This will only happen if the expected annual level of installations is reached in the first six months of a year.
As with solar PV, the export tariff for new entrants to the scheme will increase to 4.5p per kWh. This change will apply for installations from 1 December 2012.
The definition of the stand alone tariff will change from 1 December 2012 to "all installations which are not wired to provide electricity to a building". In the meantime, it continues to mean installation that feed direct into the grid without providing for onsite use.
Preliminary accreditation will be available to Solar PV and wind installations greater than 50kW declared net capacity, and all anaerobic digestion and hydro installations. The following conditions must be met before making an application:
- planning approval in place
- evidence of acceptance of a firm grid connection offer (if needed)
- for hydro - an environmental permit from the Environment agency in England and Wales, including an abstraction licence, impoundment licence, flood defence consent and fish pass approval as necessary; and in Scotland , a Controlled Activities Regular authorisation from SEPA for abstractions, impounding works and any other engineering works associated with the scheme.
Once accredited, installations will receive the tariff in place at the time they applied. This tariff guarantee will apply for a fixed period of:
- six months for solar PV
- one year for wind and anaerobic digestion
- two years for hydro.
Tariff lifetimes will still apply from the scheme's commissioning date.
Changes to the capacity, site or technology stated in a successful application will render it void. The only exception is a reduction in capacity which will still be permitted if it is still in the same tariff band.
Community energy projects will also be able to apply for preliminary accreditation for solar PV projects of less than 50kW on non-domestic buildings. The tariff guarantee will be available for one year once developers have provided a current EPC and a letter of intent.
Accreditation of Hydro
Hydro schemes will continue to be accredited under the ROO-FIT system.
Definition of community energy project:
If the FIT generator is a community interest company (CIC); co-operative society or community benefit society, with no more than 50 employees.
All community energy solar PV projects on non-domestic buildings will be exempt from the energy efficiency requirement to produce an EPC of level D or above. However they must still obtain an EPC dated on or before the system's eligibility date "so they are aware of the potential improvements that they may wish to pursue".
DECC aims to produce a community energy strategy document over the coming months, which will look at how they can address some of the upfront barriers community energy developers face. The Green Investment Bank intends to offer loans at a commercial rate to the sector, which is not expected to prove a barrier to projects being eligible for FITs.
Will also be exempt from the requirement to get a level D EPC.
Multiple installation rate
DECC will not implement its proposal to reduce the solar PV tariff for multiple installations that are not community energy or social housing projects to a level equivalent to the stand alone tariff.
If you have a question about anything in the above blog, please ask it in the comments section below.
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