The UK Department for Business, Energy & Industrial Strategy (BEIS) has recently launched a new consultation on its proposed closure of the Feed-In Tariffs (FIT) scheme which currently provides support to five small-scale low-carbon power generation technologies – solar photovoltaics (PV), anaerobic digestion (AD), hydro, wind and micro combined heat and power (CHP). The consultation closes on September 13.
Introduced in 2010, the Feed-In Tariffs (FIT) scheme was designed to support the widespread adoption of proven small-scale (up to 5MW) low-carbon electricity generating technologies. According to BEIS, installed capacity of renewable electricity generation has more than quadrupled since the end of 2010 from 9.3 GW to 38.9 GW at the end of 2017. Alongside the Renewables Obligation (RO) and the Contract for Difference (CfD) regime, the FIT scheme has played a “significant” role.
However, the Department for Business, Energy & Industrial Strategy (BEIS) highlights that since 2010, the cost of small-scale low-carbon electricity generation has been significantly reduced. As costs continue to fall and deployment without direct subsidy becomes increasingly possible for parts of the sector, it is “right that government acts to ensure continued value for money for bill payers” over the long term and why it decided in 2015 to close the generation tariff from the end of March 2019.
Amongst other things, BEIS is seeking stakeholders views on the proposal to end the export tariff alongside the generation tariff, which would close the scheme in full to new applications after 31 March 2019.
Call for Evidence
In conjunction with the open consultation launched on July 19, BEIS also launched a separate Call for Evidence seeking views on the future of small-scale low carbon electricity generation support, and evidence on the challenges and opportunities for the sector. The Call for Evidence closes on August 30.
According to BEIS, small-scale low-carbon electricity generation, where it is on balance beneficial to government’s objectives and the electricity system, should compete “independent of direct subsidy” and on its own merits on a level playing field with other electricity generation technologies through competitive, market-based solutions.
Subject to receiving “clear evidence of such benefits” through the call for evidence process the government could then consider what, if any, further action is necessary to facilitate this. Such action could include options which address regulatory barriers, ensure small-scale generators are able to access additional revenue streams or that help guarantee a route to market.
The evidence gathered from this call for evidence will allow the government to decide how to proceed after the closure of the FIT scheme in April 2019.
Bizarre and baffling
Commenting on the launch of the consultation on the closure of the Feed-in Tariff Scheme, James Court, Head of Policy & External Affairs at the Renewable Energy Association (REA) noted it was “pleasing” to hear positive words about renewables from the government, but that this has to be “backed up by good deeds.”
While nobody in the industry was expecting an 11th hour reprieve for the Feed-in Tariff, the removal of the ‘export tariff’ for new projects will lead to the truly bizarre situation where consumers who own technologies such as solar will give electricity they don’t consume to the grid for free. Post-subsidy could be a reality, but in an energy market where nothing, not even gas power stations, can be built without government support, it is unrealistic to expect consumers, businesses or developers to continue installing small-scale generation. This could be achieved by tax incentives, market enablers, and planning or building regulations, but we are currently left in an unnecessary policy vacuum without any firm proposals put forward by Government, said Court.
Charlotte Morton, Chief Executive of the Anaerobic Digestion and Bioresources Association (ADBA) warned that the proposals could put more than 300 AD combined heat and power (CHP) plants currently in the planning pipeline “at severe risk”.
With the Feed-In Tariff (FIT) confirmed to close in just nine months’ time, this was an opportunity for the government to prove that it is committed to providing the investment that is absolutely critical to supporting small-scale renewables, which make a vital contribution to decarbonising and meeting increased demand for electricity in the UK. Unfortunately, this is an opportunity that has been well and truly missed. With the government no longer providing direct support for the generation of renewable electricity, an on-farm AD will struggle to deliver its numerous non-energy benefits, which include reducing emissions from wastes, improving air quality and resource management, and restoring soils through the production of nutrient-rich biofertiliser. This also puts at severe risk the more than 300 AD CHP plants currently in the planning pipeline, said Morton.
Morton stressed that as a technology AD is falling in-between UK energy policy cracks.
It’s therefore vital that the government rethinks its baffling decision to have no new low-carbon electricity levies until 2025, which risks creating a valley of death that small-scale technologies such as AD could easily fall into. With the Renewables Obligation closing in 2017, the FIT now confirmed to close imminently, small-scale AD excluded from Contracts for Difference, and still no decision on long-term support for generation of renewable heat, we implore the government to engage with the AD industry in developing a guaranteed route to market and a robust glidepath to reduced costs. This is essential for allowing the AD industry to support the government’s policy goals across energy, waste, farming, and transport, as well as meeting its Carbon Budgets, Charlotte Morton said.
