Feed-in tariff 'pre-accreditation' to end from next month, says UK government

Out-Law News | 11 Sep 2015 | 11:34 am | 2 min. read

Planned small-scale renewable energy generation projects will no longer be able to access guaranteed feed-in tariff (FiT) rates before project completion, the UK government has announced.

'Pre-accreditation' under the FiTs scheme will now end on 1 October, meaning that any projects planned after this date will only be entitled to receive the rate of subsidy available at the point that they are completed, according to the announcement. The change, which follows a four-week consultation period, is the latest policy announcement by energy secretary Amber Rudd aimed at cutting the cost of the UK's renewable energy subsidy programmes to the public.

"My priorities are clear: we need to keep bills as low as possible for hardworking families and businesses while reducing our emissions in the most cost-effective way," she said.

"Our support has already driven down the cost of renewable energy significantly. As costs continue to fall it becomes easier for parts of the renewables industry to survive without subsidies, which is why we're taking action to protect consumers whilst also protecting existing investment," she said.

Pre-accreditation was introduced alongside automatic tariff cuts in 2011/12. It gives developers of planned solar photovoltaic (PV) and wind projects above 50kW, as well as all hydro and anaerobic digestion (AD) projects, a guaranteed tariff level before a project is commissioned, provided it has planning consent and a grid connection agreement. The project must then be commissioned and full accreditation granted within a specified period. Community groups and schools with solar PV installations below 50kW can access a similar 'pre-registration' scheme.

The government said that ending the ability to pre-accredit or pre-register was of "critical importance in ensuring the overall value for money of the FiT scheme and limiting the impact of rising policy costs on consumer bills". It would also limit the value of 'deployment surges' in response to tariff reductions. Although pre-accreditation and pre-registration will end on 1 October, the consultation does not rule out re-introducing these measures depending on the effectiveness of a wider review of the FiT scheme at controlling costs.

According to the paper, all but 16 of the respondents to the government's consultation on the changes objected to the proposals. The government agreed with respondents that the change would "introduce considerable uncertainty in the short term", but added that it was "necessary to safeguard spend under the scheme while we carry out the FiT review".

FiTs provide long-term financial incentives to businesses and homeowners that generate their own electricity from renewable sources. Once accredited under the scheme, installers are eligible for guaranteed 'generation' payments for the power that they generate and 'export' payments for additional power that they send to the grid over the life of the generation equipment, subject to a statutory maximum. Payments vary according to project size and the type of technology used.

The cost to the public of the support available under FiTs and other renewable energy generation subsidy schemes is limited using a mechanism called the Levy Control Framework (LCF). Government research published in July found that the cost of these programmes could reach £9.1 billion per year by 2020/21, compared to the £7.6bn per year budgeted for through the LCF. The government has since announced a number of changes to FiTs and to the Renewables Obligation (RO) for larger projects, ranging from lower rates to removing certain technologies from the scope of the subsidy programmes entirely.

A consultation on a wider review of the FiTs scheme planned by the government closes on 23 October. It proposes tariff cuts of as much as 87% in some cases, which would come into force from January, as well as new degression mechanisms to reduce the cost of the scheme in line with deployment and falling installation costs. However, the government has also warned that it could close the scheme to new applicants entirely if it becomes "unaffordable" while the review continues.