Following the latest FIT review consultation, the government is proposing substantial cuts to FIT payments. There is also uncertainly about the future of the support mechanism.
We set out the key points below:
- The consultation shows the government's intent to tightly control support for renewables.
- The development of rooftop solar panels, small-scale wind turbines, and other renewable energy systems is going to become more difficult.
- It is unclear whether these proposals will affect community schemes.
- DECC is proposing to end the right to pre-accredit projects and it doesn't look like the scheme will be rolled out in Northern Ireland.
- The consultation confirms Ministers' rights to end the generation tariff for all new 2016 installations, leaving only the export tariff.
- The government's impact assessment confirms that the proposed cuts and introduction of a spending cap will lead to lower deployment, lower generation and higher carbon emissions.
The proposed cuts are likely to become law in January 2016. DECC may even close the scheme more quickly if it thinks it will be unable to meet the new spending cap. They have indicated that "if cost control measures are not implemented or effective in ensuring that expenditure under the scheme is affordable and sustainable, government proposes that the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016, while keeping the export tariff as a route to market for the renewable electricity they generate".
Support for developments:
- with >4kW of capacity would be moved into a new band for systems with >10kW capacity and tariffs would be cut from 12.47p/kWh to 1.63p/kWh;
- with 10-50kW of capacity be cut to 3.69p/kWh;
- of 2.5kW to 1MW will be cut to 2.28p/kWh; and
- of 1MW + will be cut to 1.03p/kWh.
Support for turbines of:
- between 100kW and 500kW will fall from 10.85 p/kWh to 4.52p/kWh;
- between 500kW and 1.5MW will fall from 5.89 p/kWh to 4.52p; and
- 1.5MW + will not be eligible for support.
Support for developments:
- of 2MW + is likely to be cut from 2.43p to 2.18p;
- of between 500kW and 2MW is likely to be cut from 8.91p to 6.56p; and
- 2MW - the cuts are likely to be less harsh.
For more information contact Kerri Ashworth, legal director in TLT's Energy and Renewables team on +44 (0)333 006 0423 or kerri.ashworth@TLTsolicitors.com.
This publication is intended for general guidance and represents our understanding of the relevant law and practice as at August 2015. Specific advice should be sought for specific cases. For more information see our terms & conditions.