Jul 23, 2012 - The UK Department of Energy and Climate Change (DECC) on Friday unveiled new incentive rates for non-photovoltaic (PV) small-scale green power projects, the final package of amendments to the feed-in tariff (FiT) scheme.
Following consultation in February, the government has now announced final FiTs for up-to-5-MW anaerobic digestion (AD), hydro and wind projects as well as micro combined heat and power (microCHP) installations.
The tariffs are mostly the same as proposed in the consultation. A new element is the introduction of a band of between 100 kW and 500 kW for hydro, so that developers are not encouraged to design undersized facilities to avoid a sharp decrease in FiTs between current bands. The tariff for projects falling into the new category will increase to GBP 0.155 (USD 0.242/EUR 0.199) per kWh from GBP 0.121.
The tariffs for the smallest wind projects of between 1.5 kW and 100 kW, which currently range from GBP 0.358 to GBP 0.254, will be reduced to GBP 0.210. Those for the 100 kW-500 kW band will fall to GBP 0.175 from GBP 0.206 and for 500 kW-1,500 kW to GBP 0.095 from GBP 0.104. For the largest projects of between 1,500 kW and 5,000 kW the tariff will be GBP 0.0448, compared with GBP 0.049 currently.
The payments for microCHP will rise to GBP 0.125 from GBP 0.105 due to the low uptake so far.
Other tariffs will remain largely at their current levels. The new incentive rates will take effect from December 1, not October 1 as initially proposed, after going through Parliament. The reduced tariffs for solar PV, unveiled in May, are due to take effect from August 1.
There will be a degression mechanism in place for anaerobic digestion, wind and hydro projects from April 2014. Tariffs will be reduced at fixed annual time points at an expected rate of 5% per year. The actual decrease will depend on the deployment in the previous year and will vary from 2.5% to 20%, excluding some wind bands, where the minimum reduction will be 5%. Half-yearly cuts will be possible in case of high demand early in a year.
Another change is the introduction of preliminary accreditation for all anaerobic digestion and hydropower installations as well as wind and PV projects of above 50 kW. Thus, developers will know they will be accredited before construction and will have certainty over tariffs for half a year to two years based on the technology, DECC says. If a project is completed within the tariff guarantee period, the developer will receive the tariff in force at the time it applied for preliminary accreditation.
Non-domestic community energy PV projects up to 50 kW will also benefit from advance tariff guarantees. Community and school solar projects will further be exempt from the energy efficiency requirement adopted for solar from April.
DECC also proposed a flexible degression system for the non-domestic Renewable Heat Incentive (RHI) scheme. The proposal envisages reducing tariffs for new applicants when demand gets closer to trigger points set in advance. Tests will be conducted quarterly to determine whether a reduction is needed.
Paul Thompson, head of policy at the Renewable Energy Association, said: "These decisions demonstrate that DECC has listened carefully to industry concerns, and should restore certainty to the sub-5MW sector (…) The introduction of tariff guarantees for projects at a relatively early stage is also very helpful, and we look forward to a similar approach being extended to the Renewable Heat Incentive."
UK's renewable energy sector at present
DECC last month released data showing that the amount of electricity generated from renewable sources in the first quarter of 2012 rose by 39% on the year to 11.1 TWh. The share of renewables in overall electricity generation accordingly increased to 11.1% from 7.7% a year earlier. On the back of capacity expansion, onshore wind generation grew 51.1% to 3.55 TWh. Offshore wind was up 49.8% to 1.49 TWh, while hydro also showed a strong increase of 43.5% as a result of high winter rainfall.
At the end of the quarter, UK's renewable electricity capacity stood at 13 GW, 36.1% higher than a year ago.
(GBP 1.0 = USD 1.562/EUR 1.285)
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