UK Government provides certainty for investors in renewable heat and small-scale electricity

Posted: 20 July, 2012. Written by NNFCC

The UK Government has today announced changes to the Feed-in Tariffs (FiTs), following consultation earlier this year, and also unveiled proposals to improve the performance and manage the future budget of the non-domestic Renewable Heat Incentive (RHI).

Feed-in Tariffs

Amongst the changes, which saw cuts to subsidies for wind and an increase for microCHP tariffs, there were also small changes for anaerobic digestion ( AD) (see below). These changes will affect all newly eligible technologies from 1 December 2012 onwards.

A degression mechanism will be introduced for AD, wind and hydro from April 2014, which will reduce the subsidy rate in line with uptake of these technologies. Any changes will be published two months before the degression date and based on publicly-available data, say DECC.

The new tariffs for AD will be:

• ≤250kW: The current rate of 14.7 p/kWh will remain unchanged
• >250 - ≤500kW: The current rate of 13.6 p/kWh will remain unchanged
• >500 - ≤5000kW: The current rate of 9.9 p/kWh will decrease to 8.96 p/kWh from December 2012

DECC is introducing a system of preliminary accreditation so all AD and hydro installations and larger wind and PV installations (over 50 kW) will be able to know before construction that they will be accredited.

It will also provide certainty over tariffs for six months to two years depending on the technology. This means that if a developer gets their project up and running within the tariff guarantee timescale, they will receive the tariff that applied at the time they asked for preliminary accreditation.

Renewable Heat Incentive

DECC also set out proposals to manage the future budget of the RHI scheme for non-domestic users, providing greater certainty to the market.

To ensure the RHI budget is managed effectively, DECC is proposing to introduce a flexible degression based system. Under this system tariffs would be reduced for new applicants if uptake approaches pre-determined trigger points.

Progress towards the trigger points for each technology and the scheme overall would be monitored throughout the year and data published monthly. If a tariff reduction is needed, DECC say they will provide one month’s notice.

In addition, DECC have set out plans to introduce greater environmental sustainability in the RHI through the inclusion of standards on biomass sustainability (in line with the UK Bioenergy Strategy published in April 2012) and a clear process for how the air quality regime will work.

DECC is also looking to simplify the metering arrangements for the RHI, reducing the administrative burden on participants and taking views on the scheme from existing applicants into account.

For more information on the changes to the Feed-in Tariffs and Renewable Heat Incentive please visit www.decc.gov.uk/en/content/cms/news/pn12_085/pn12_085.aspx