Deployment success of FITS has come with costs exceeding projections, according to DECC.
It is therefore proposing measures to place policy costs on bills on a sustainable footing, improve bill payer value for money, and limit the effects on consumers who ultimately pay for renewable energy subsidies.
The measures include revised tariffs based on updated technology cost data, a more stringent degression mechanism and deployment caps leading to the phased closure of the scheme in 2018-19.
It also says that if such measures cannot put the scheme on an affordable and sustainable footing then there should be an end to generation tariffs for new applicants as soon as legislatively possible, which could be as early as January 2016.
The review follows an earlier consultation in July-August 2015 on removing FITs pre-accreditation to limit the impact on bill payers of deployment surges.
The consultation asks 32 questions about the impact of major proposed changes to the scheme. The first, around value for money, proposes new generation tariffs based on fresh evidence about costs, technology characteristics, and rates of return new FIT participants might get. The second, around cost control, proposes a cap on new FITs expenditure of between £75-100m by 2018/19.
The consultation closes 23 October 2015.
Despite the consultation leaving anaerobic digestion (AD) tariffs unchanged for now, the proposal to limit the FITs scheme to a maximum overall budget of £75-100 million from January 2016 to 2018/19 will have a disastrous affect on investor certainty and therefore any further deployment, according to the Anaerobic Digestion and Biogas Association (ADBA).
DECC are proposing to support just 17 new AD plants in 2016.
ADBA’s Chief Executive, Charlotte Morton, explained: “The FIT consultation proposes restricting support for anaerobic digestion to just 17 new plants next year – which would effectively mean an 80% cut in investment for an industry which deployed 89 clean baseload power plants in 2014.
“This should be the time to build on our foundations, not dismantle them. Support of AD offers a fantastic return on the taxpayer’s investment, providing baseload electricity to help keep the lights on, offering cost-effective greenhouse gas reductions and growing a domestic supply chain which can export to the world.
“This should be the time to build on our foundations, not dismantle them. Support of AD offers a fantastic return on the taxpayer’s investment, providing baseload electricity to help keep the lights on, offering cost-effective greenhouse gas reductions and growing a domestic supply chain which can export to the world”
“If DECC’s current proposals go ahead, the results would prove disastrous for the renewables industry, and for the UK becoming a high-productivity leader in the world’s green economy. It will lead to higher consumer bills in the long-term, a greater reliance on energy sourced from volatile parts of the world, and an uncertain future for UK farming resilience, all in the year when the Prime Minister wishes to take his stand as a global leader in pledging substantial carbon reduction targets.
“The last thing British clean energy needs is boom and bust: limiting industry’s growth in this way, especially before DECC has even consulted on appropriate support levels for the technology, will inevitably mean dismantling teams with global ambitions and losing jobs. We will be working with our members to respond strongly to the proposals and demonstrate the excellent value for money which AD provides.”
This announcement comes as earlier this week ADBA highlighted the progress that the industry has made with the support of government incentives, with the anaerobic digestion (AD) industry now delivering an electrical equivalent capacity (electricity and biomethane) of 514 megawatts across 411 plants in the farming, waste and water sectors.
DECC’s announcement stands to undo all this colossal achievement from the previous parliament just at the moment the growth surge takes hold.