better generation

Feed-in Tariff (FIT) figures were announced today for Renewable Energy generators. In addition, a blueprint for the Renewable Heat Incentive (RHI), a world first, was unveiled, although this won't come into effect until April 2011. Ed Miliband feels that "the Feed-in Tariff will change the way householders and communities think about their future energy needs, making the payback for investment far shorter than in the past".

There has been a fair amount of speculation as to when these finalised figures were to be released, but now they are confirmed the doors have been opened for an expansion of the Renewable Energy sector. 

Notable highlights of the announcement are the increased rates (compared to the October proposal response) for all technologies, with retro-fitted PV as high as 41.3p/kWh and wind up to 34.5p/kWh. However, the export tariff, proposed at 5p/kWh has been reduced to 3p/kWh, which explains in part the increased generation tariff. The third bracket for small wind has been enlarged from 15kW-50kW as per the proposals, to 15kW-100kW. This is now a relatively large bracket and may lead to massive demand for 100kW turbines. 

The tariff of 34.5p/kWh for micro-wind turbines (<=1.5kW) could lead to a surge in urban wind turbines, which is not always a good thing. The 5-8% return on investment that the tariffs have been calculated to offer is below the 10% demanded by Friends of the Earth and the Renewable Energy Association.

DECC initially intended on degressing the tariffs each year, although they have now decided to give a two year period of unchanged rates, principally in order to get the ball rolling before degression as of April 2012. For certain technologies, e.g. hydro, and for certain capacity brackets, e.g. wind 100-500kW, tariffs are fixed and not reduced each year (for generation tariffs up to 2020 see page 47 of DECC's consultation document which can be found here). The main reason for annually reducing tariffs is to encourage cost reducing and to avoid complacency. All tariffs will be adjusted annually in line with changes in the Retail Price Index (RPI).  

Those Renewable Energy generators having installed capacity (<50kW) before 15th July 2009 will earn the rate of 9p/kWh, and those having installed between pre 15th July >50kW and <5MW will have a one-off choice to receive either FITs or continue with ROC payments. 

Key players surrounding the FIT will be:

- DECC (Department of Energy and Climate Change), who will be managing and reviewing the scheme;

- Ofgem who will be providing administration and accreditation (>50kW);

- Gemserv - accreditation of installations of less than 50kW under the MCS scheme;

- The Energy Saving Trust, who will be the main body for microgeneration advice, and

- Electricity suppliers, who will be obliged to purchase all renewable energy generated by producers at the tariffs put forward today. Suppliers will also be responsible for registering generators on the Central FIT Register, the administrative database where all the information surrounding the FIT will be stored. 

Proposed tariff levels for the Renewable Heat Incentive (RHI) scheme have also been published today, with solar thermal installations up to 20kW notably receiving 18p/kWh over a lifetime of 20 years. The consultation for the RHI opens today, and will close in 12 weeks, which is Monday 26th April.

For more information about Feed-in Tariffs, including a comparison against the phased out Renewables Obligation (RO), see our factsheet.