The Department of Energy and Climate Change (DECC) has opted to keep Feed In Tariffs (FiT) open beyond January 2016, following a consultation launched in August that warned the scheme would close if costs could not be controlled.
Deployment success of FITS has come with costs exceeding projections, according to DECC and it proposed 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.
Following feedback from the consultation, Government has opted to keep the FITs scheme open beyond January 2016, and says this is only feasible because of the cost control measures introduced.
Amber Rudd – “My priority is to ensure energy bills for hardworking families and businesses are kept as low as possible whilst ensuring there is a sensible level of support for low carbon technologies that represent value for money”
These new measures include a new tariff for domestic-scale solar of 4.39p /kwh and deployment caps will be set to limit new spending on the scheme to £100m up to the end of 2018/19.
It will also pause new applications to the FiT scheme from 15 January to 8 February, to allow time for the implementation of cost control measures.
The new tariffs and a capped budget will, Government believes, allow deployment to come forward whilst providing significantly better value for money to bill payers. The scheme will remain under review to ensure it continues to achieve its objectives until generation tariffs end in 2019.
The Anaerobic Digestion and Biogas Association (ADBA), however, said the cap would have a “disastrous affect” on investor certainty and therefore any further deployment.
Secretary of State for Energy and Climate Change, Amber Rudd, said: “My priority is to ensure energy bills for hardworking families and businesses are kept as low as possible whilst ensuring there is a sensible level of support for low carbon technologies that represent value for money.
“We have to get the balance right and I am clear that subsidies should be temporary, not part of a permanent business model. When the cost of technologies come down, so should the consumer-funded support.”
DECC has also announced changes to the Renewables Obligation (RO) scheme for solar PV with a capacity at 5MW and below.
The RO came into effect in 2002 in England and Wales, and Scotland, followed by Northern Ireland in 2005. It places an obligation on UK electricity suppliers to source an increasing proportion of the electricity they supply from renewable sources.
Government has announced it will:
- close the RO across Great Britain to new solar PV capacity at 5MW and below from 1 April 2016
- introduce grace period arrangements to protect developers who made a significant financial commitment on or before 22 July 2015 and developers who experience grid delay beyond their control
- provide clarification of the planning evidence for the significant financial commitment grace period to exclude incomplete or invalid applications
- remove “grandfathering” (a fixed rate of support from the date of accreditation) from 22 July 2015 for solar projects in England and Wales with an exception for those which meet the significant financial commitment criteria as of 22 July 2015
- hold a solar-specific banding review in England and Wales and consult on new bands for 2016/17
- consult on an exception designed to provide projects with protection against the proposed reduction in support where they qualify for the grandfathering exception.