Background
On 7 February 2011, the Government announced the first comprehensive review of the Feed-in tariffs (FITs) scheme for small-scale low-carbon electricity generation.
A principal objective of the review was to determine how the efficiency of FITs will be improved to deliver £40 million of savings, around 10%, in 2014/15, as committed to in the 2010 Spending Review. This commitment reflects the need for a responsible approach to public subsidies like FITs, to ensure value for money for consumers. HM Treasury published a control framework for DECC levy-funded spending that includes the FITs scheme.
The review is considering all aspects of the scheme including:
- tariff levels
- degression rates and methods
- eligible technologies
- arrangements for exports
- administrative and regulatory arrangements
- interaction with other policies
- accreditation and certification issues
We have decided to separate the review into two phases.
Phase 1 is considering:
- small-scale solar PV (with a total installed capacity of 250 kilowatts or less)
- prioritising energy efficiency by linking PV tariffs to specified minimum energy efficiency requirements from 1 April 2012, and
- introducing new multi-installation tariff rates for aggregated solar PV schemes, applying to new installations with an eligibility date after 1 April 2012
Phase 2 of the review will consider wider issues including tariffs for non-PV technologies, new cost control mechanisms and administrative aspects of the scheme. We are aiming to launch a consultation in early February.
Phase 1 Consultation
A consultation was launched on Phase 1 and ran until 23 December 2011.
The proposals were subject to an eight-week consultation period. If implemented, they would introduce a new tariff for schemes up to 4kW in size of 21.0p/kWh – down from the current 43.3p/kWh. Reduced rates are also proposed for schemes between 4kW and 250kW, to ensure that those schemes receive a consistent rate of return. The table of proposed tariffs is below.
| Band (kW) |
Current generation tariff (p/kWh |
Proposed generation tariff (p/kWh) |
| ≤4kW (new build) |
37.8 |
21.0 |
| ≤4kW (retrofit) |
43.3 |
21.0 |
| >4-10kW |
37.8 |
16.8 |
| >10-50kW |
32.9 |
15.2 |
| >50-100kW |
19 |
12.9 |
| >100-150kW |
19 |
12.9 |
| >150-250kW |
15 |
12.9 |
| >250kW-5MW |
8.5 |
8.5* |
| stand alone |
8.5 |
8.5* |
* Note that these are the current tariffs which we are not proposing changing and which, like all other current tariffs, will be adjusted in line with the Retail Price Index from 1 April 2012.
Under the proposals, the new tariffs would apply to all new solar PV installations with an eligibility date on or after 12 December 2011. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2012. Consumers who already receive a FIT will see their existing payments unchanged, and those with an eligibility date on or before 11 December 2011 will receive the current rate.
Consumers and industry representatives should also view the ‘Where do I find out more’ section to find out who to contact for further information.
If you are considering generating your own electricity, the Energy Saving Trust website also offers information about your options. Energy Savings Trust helpline: 0800 512 012.
Fast-track review
We have previously given fast-track consideration to the tariffs for large-scale (over 50 kilowatts) and stand-alone solar photovoltaic (PV) projects and farm-scale anaerobic digestion (AD) projects (up to and including 500 kilowatts). A consultation on the fast-track review was held from 18 March to 6 May 2011.
The outcome of this consultation was announced on 9 June 2011. This confirmed that, having carefully considered the responses received, the Coalition Government has decided to proceed with the proposed tariff reductions for large-scale solar PV (over 50 kilowatts), all stand-alone PV projects and increases for farm-scale AD projects (up to and including 500 kilowatts). The detail of this decision and the analysis underpinning it are set out in Feed-in Tariffs scheme: Summary of responses to the Fast Track Consultation and Government Response.
The new tariffs for large-scale (over 50 kilowatts) and stand-alone solar PV came into force on 1 August 2011. The new tariffs were introduced through Modifications to the Standard Conditions of Electricity Supply Licences. These modifications also include the new higher tariffs for farm-scale AD projects (up to and including 500 kilowatts). However, the implementation of the new AD tariffs was conditional on state aid approval.
The European Commission has now made its decision on the new AD tariffs. New tariffs for AD will apply to installations with an eligibility date from 30 September 2011, which is the date on which the Commission made the decision.
The FITs table of tariffs following the fast-track review can be viewed under the list of Key Feed-in Tariffs Scheme Documents on the FITs Implementation page.
Extensions
Since announcing the outcome of the fast-track review, DECC became increasingly aware of evidence some large-scale solar PV developers were intending to use provisions in the FITs legislation on the accreditation of extensions to installations, to take advantage of the current tariffs beyond 1 August 2011. This was not the intended effect of the extension rules and was clearly inconsistent with the objective of the fast-track review.
Therefore, a consultation on the treatment of extensions was held from 27 July to 31 August 2011. The outcome of this consultation was announced on 27 September 2011 and confirmed the decision to amend the rules on extensions. These amendments have been made through the Feed-in Tariffs (Specified Maximum Capacity and Functions) (Amendment No.3) Order 2011, which was laid in Parliament on 27 September 2011 and came into force on 18 October 2011.
The new rules mean that if the extension takes an existing installation over a tariff band boundary, the extension would immediately receive the new tariffs for the larger band, but the original installation would continue receiving the current tariff for its current band.