by David Birchall and Caroline Lindsey
In April, we reported on changes to the feed-in tariff scheme for solar photovoltaic (PV) technology in the United Kingdom Those changes were the outcome of Phase 1 of the Department of Energy and Climate Change’s (DECC) comprehensive review of the feed-in tariff scheme launched in February 2011 (the FIT Scheme). In addition to solar PV technology, the FIT Scheme is available to hydro, wind, anaerobic digestion (AD) and micro-CHP technology.
The DECC then consulted on Phase 2B of its comprehensive review, which focused on feed-in tariffs for non-PV technologies and wider scheme administration issues (the Consultation). On July 20, 2012, the DECC published its response to the Consultation (the Response) and has confirmed that a number of changes will be made to the FIT Scheme. The changes will be introduced by way of amendments to the Standard Conditions of Electricity Supply Licences. Most of the changes are expected to come into effect on December 1, 2012.
The key changes to the FIT Scheme to note are as follows.
1. The generation tariffs for non-PV technologies will be reduced with effect from December 1, 2012, except that:
- a new generation tariff will be introduced for hydro installations with a capacity of between 100 and 500 kilowatts; and
- the generation tariff for micro-CHP installations will be increased to 12.5p/kWh.
A full list of the generation tariffs to apply from December 1, 2012 is available at page 8 of the Response. We note that the generation tariff for the largest capacity band of each technology is linked to the equivalent level of support available to that technology under the Renewables Obligation. Consequently, the DECC has indicated that the tariffs applying to those bands will be amended to reflect the outcome of the DECC’s Renewables Obligation banding review. The DECC announced the outcome of its current review on July 25, 2012, but is yet to confirm the corresponding amendments that will be made to those tariffs.
2. A preliminary accreditation process will be available to solar PV and wind installations with a capacity of more than 50 kilowatts, as well as all AD and hydro installations. The criteria for preliminary accreditation will be similar to, but narrower than, the criteria to obtain preliminary accreditation as a renewable generator under the Renewables Obligation. Among other things, installations for which a grid connection is required will need to produce evidence of a firm grid connection offer to receive preliminary accreditation. Installations that receive preliminary accreditation will also benefit from a fixed tariff for a prescribed period.
3. A tariff degression mechanism will be introduced, under which generation tariffs for all non-PV technologies, with limited exceptions, will be decreased annually from April 1, 2014. The baseline degression rate will start at 5 percent, and will be adjusted annually according to the level of deployment of the relevant technology. As a result, the degression rate could be as small as 2.5 percent for some technologies but will not exceed 20 percent for any technology. The DECC will also be able to apply a mid-year degression to a tariff for a technology if it considers that the level of deployment in the preceding six months has been particularly high.
4. Measures will be introduced to provide further support to community energy projects. These include a guarantee of a fixed tariff for community energy solar projects on non-domestic buildings with a capacity of under 50 kilowatts.
5. Various amendments designed to improve the administration of the scheme will be introduced. These include amending the definition of “site” to clarify the treatment of multiple installations with the same meter point administration number and amending the definition of “commissioned” to clarify that an installation has to be “operational” to be eligible to receive a feed-in tariff.