mfg Blog

News and Events

Government's response to FiT consultation will see energy subsidy revisions

  • Posted

On December 17th the Government published its Response to the recent Consultation for a full-scale review of the Feed-in Tariff Scheme. Whilst there are mixed results, the Response contains some welcome good news for the renewables sector.

In the majority of cases tariff reductions are not as aggressive as had been indicated when the Consultation paper was published back in August. By way of example, the proposed 87% cut in solar PV tariffs for sub 4kW installations will now (only) be to a 65% cut, the proposed 67% cut for 50-100kW wind installations will reduce to a 38% cut (and 2MW plus hydro installations will actually see an increase in the tariff). Some tariffs have however fared worse, sub 2MW hydro installations will for example now face cuts of between 31% and 45% as opposed to the cuts of between 26% and 31% that were proposed when the consultation was published.

It was also confirmed in the Response that tariff degression will be linked to new quarterly deployment caps based on an overall budget cap of £100 million per year to be divided between technologies and degression bands. The caps are however low and for some technologies quarterly deployment caps will be met by single figure deployments. If a quarterly deployment cap is exceeded the eligibility for the Feed-in Tariffs will be frozen until the deployment cap is lifted in the following quarter and with those applications placed in a queue for when the next cap opens. There is no guarantee that these installations will received FiT payments until they are registered under the following cap, nor is there a guarantee on which the rate they will receive.

The government has also announced that it is to reverse decision earlier this year to remove the preliminary accreditation process from FiTs. Preliminary accreditation will therefore be reintroduced from 8th February 2016 for solar PV and wind of over 50kW and all anaerobic digestion and hydro projects. Validity periods will be 6 months for solar, 1 year for wind and anaerobic digestion and 2 years for hydro projects. Community projects will also benefit from an additional 6 month period, on top of the time allowed for the relevant technology.

While the amendment to the Feed-in Tariff order was laid before parliament on Thursday, given the Christmas recess the changes cannot come into effect until 8 February 2016. Accordingly the FIT scheme will be paused from 15 January until 8 February 2016, when the new tariff and deployment caps will be in place. During this pause, no new installations will be accredited for FITs unless they have pre-accreditation that was granted before 1 October 2015.