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Briefing Note on Feed-in Tariffs
- 20% of the UK’s energy coming from renewable sources by 2020
- 80% reduction in carbon dioxide emissions coming from UK energy supply by 2050
These commitments are, to say the least, challenging. It is increasingly recognised that as well as making every home and business energy efficient, there is also the need to have some renewable technologies associated with the premises. This is the driver behind the proposed introduction of Feed-in Tariffs (FiTs) to support small scale renewable energy generation technologies.
Such schemes are widely used in the rest of Europe and have been particularly more successful (and as the energy regulator Ofgem has frequently pointed out, much cheaper for the energy consumers) than the current UK support mechanism - the Renewable Obligation - which is effectively a quota system. The FiT guarantees a long term premium payment for electricity generated from small scale renewable energy sources. The tariff lifetime is for 20 years for renewable energy sources except for Photo-Voltaic (PV) which has a 25 year lifetime. The FiT is more transparent and easier to administer than the current renewable obligation for smaller energy users/generators.
The FiT operates at 2 levels by awarding a value for all the electricity generated and an additional premium for the units of electricity actually exported to the national grid. The proposed export tariff is 5p/kWh. The generation tariffs vary by technology and size but at the smaller scale level could be typically 30p/kWh.
The UK already has the power to introduce the FiT under the 2008 Energy Act. There was a recent Government consultation which closed on 15th October 2009 and which proposes to incentivise electricity installations up to a maximum capacity of 5MW electric. The timescale, to say the least, is ambitious (by April 2010). Technologies which will be supported include wind, solar PV, hydro, anaerobic digestion, biomass and biomass CHP. There is also the inclusion of micro-CHP from non-renewable energy sources such as natural gas up to a maximum capacity of 50 kW electricity generation.
It is expected that as the costs of technologies fall with increasing installation numbers, that levels of financial support for new projects will also fall – indeed there is a plan to have built-in "degression" figures which will lower some FiT tariffs automatically each year. It is therefore clearly worth getting in quickly while the support levels remain high, and while there is availability of funding from programmes such as the Low Carbon Buildings Programme and also the energy suppliers’ obligations under the Carbon Emissions Reduction Target (CERT).
Having experience of wide spread implementation of renewables in several markets with Feed-in Tariffs in operation, Self Energy has the expertise to make the most of the opportunities that the Feed-in-Tariffs will bring to the UK.
Given the aim of introducing FiTs by April 2010, an announcement of the Government’s final decisions on its structure and tariff prices can be expected soon. Self Energy UK is monitoring the situation and will be able to advise on the best option for your particular site – watch this space!
10/12/2009