DECC announces results of Phase 2B consultation and confirms non-PV Feed-in Tariff rates
Date of Article
Jul 23 2012

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23 July 2012, The Department for Energy and Climate Change (DECC) has now confirmed changes to the non-PV Feed-in Tariff (FiT) rates, which are set to come into effect from 1 December 2012, subject to Parliamentary approval.

Apart from one minor discrepancy within the 250-500kW anaerobic digestion (AD) banding, the final FiT generation rates for wind energy, AD and micro-CHP installations are consistent with those proposed in the Phase 2B consultation document, which was published in February this year.

The changes see a roughly 20 per cent increase in the FiT for micro-CHP (under 2kW) installations.

There will be no change to the current AD tariff levels for sub 500kW installations, although installations of 500kW to 5MW will reduce by around 10 per cent to retain parity with the Renewable Obligation Certificate (ROC).

Hydro has experienced a general increase in support owing to a lack of uptake which is welcomed.

The solar PV rates are unaffected by this consultation response, having been set from 1 April with an ongoing three monthly reduction depending on capacity installed, with the first such reduction occurring from 1 August. However, there is some concern from the industry that the delayed ROC consultation will spell further bad news for large scale installations.

Wind installations have, as expected, seen the largest reductions; all bandings will see a cut in their tariff, with a minimum reduction of 15 per cent in the bandings below 500kW capacity.

The cost control mechanisms proposed have seen some changes on the back of consultation feedback. The baseline annual FiT degression from April 2014 will remain at 5 per cent each year. However, with the exception of those bands that are linked to ROC tariffs and the wind bands in the range of 100–1500kW, a lower rate of 2.5 per cent has been introduced if deployment is well below expectations. Conversely, degression rates of 10 per cent and 20 per cent will apply if deployment is in the range of 75-300 per cent and over 300 per cent of the expected value, respectively. Six-monthly deployment thresholds have also been introduced.

As proposed in the consultation, DECC is also introducing a system of preliminary accreditation. The system will primarily be available to solar PV and wind installations of greater than 50kW net capacity, and all AD and hydro installations. To be eligible, proposed installations must have planning approval and evidence of acceptance of a firm grid connection offer, if needed. Hydro installations must also have any necessary environmental approvals. The system will provide a tariff guarantee for a fixed period of six months to two years depending on the technology.

Another fundamental change sees the export tariff increase to 4.5p/kWh for new installations in all technologies, to match that of solar-PV.

Andrew Watkin, head of the Carter Jonas Energy and Marine Team, comments, "We are pleased to finally have some clarity on the future of the Feed-in Tariff and hope it will give investors the confidence to move forward with projects positively. The ability to lock into FiT rates before commissioning will boost investor confidence, however the proposals for 10 per cent and 20 per cent degression rates will create further uncertainty over future FiT levels. We hope that DECC will remain transparent with current levels of uptake to ensure investors can make informed decisions.

Although we did not want to see such a large reduction in the wind tariff levels, we are pleased that the export tariff has been increased to 4.5p/kwh to match that of solar PV. Given that technology prices in wind energy are not coming down significantly, this will go some way towards keeping returns high enough to stimulate further growth in the industry."

Technology Band (kW) Current generation tariffs (p/kWh) Consultation tariffs from Oct 2012 (p/kWh, 2012 prices) Final tariffs from 1 Dec 2012 (p/kWh, 2012 prices)2 Community energy tariff (see explanation in paragraphs 148-151)
Hydro <15 21.9 21.0 21.00 21.00
>15-≤100 19.6 19.71 19.60 19.60
>100-<500 12.1 12.1 15.50 15.50
>500-<2000 12.1 12.1 12.10 12.10
>2000-<5000 4.9 4.5 (2.2 from April 2013) 4.483 4.483
Wind ≤1.5 35.8 21.0 21.0 21.00
>1.5-<15 28.0 21.0 21.0 21.00
>15-<100 25.4 21.0 21.0 21.00
>100-<500 20.6 17.5 17.50 17.50
>500-<1500 10.4 9.5 9.50 9.50
>1500-<5000 4.9 4.5 (4.1 from April 2013) 4.483 4.483
AD <250 14.7 14.7 14.70 14.70
>250-<500 13.6 13.71 13.60 13.60
>500-<5000 9.9 9.0 8.96 8.96
microCHP <2 10.5 12.5 12.50 12.50