The Government has unveiled its proposed changes to both the Feed-in Tariff (FIT) for anaerobic digestion and also the Renewable Heat Incentive (RHI).
Changes will affect tariffs for all newly eligible FIT technologies from 1 December this year, according to the Department of Energy and Climate Change (DECC).
For anaerobic digestion, a degression mechanism will be introduced from April 2014 in line with uptake of these technologies. Tariffs will be published two months before the degression date and will be based on publically available data.
But this move has been criticised by the Renewable Energy Association.
Its head of policy Paul Thompson said: “These decisions demonstrate that DECC has listened carefully to many of our concerns, and this should restore some certainty to the sub-5MW sector. We particularly welcome the support for community schemes and the improvements to the cost control mechanism. The introduction of tariff guarantees for projects at a relatively early stage is also very helpful.
“However, our overarching concern that ambitions for AD are too low has not been addressed. We will be pressing the Coalition Government to raise its ambitions for AD in line with clear commitments in the Coalition Agreement.”
In particular, REA highlights that the capacity triggers for AD are out of step with the Coalition Agreement’s commitment to a massive increase in AD. Under the proposals, the installation of just six average-sized on-farm AD systems in a given year would lead to a 20 per cent reduction to the AD tariff.
DECC has also set out proposals to improve the performance and manage the future budget of the non-domestic RHI.
To ensure the PHI budget is managed effectively, DECC is proposing to introduce a flexible degression based system. Under this system tariffs would be reduced for new applicants if uptake approaches pre-determined trigger points.
Tests to see whether degression is needed would take place quarterly, and one month’s notice would be given if a tariff reduction is needed. Progress towards the trigger points for each technology and the scheme overall would be monitored throughout the year and data published monthly.
Energy and Climate Change Minister Greg Barker said: “The Coalition is fully committed to driving forward investment in renewable heat, and our proposals will make sure we provide the right support for the industry.
“We want to continue helping renewable heat to grow and flourish, providing long term certainty for those who choose to invest in it.”
Paul Thompson added: “There are clearly many details still to resolve on the cost control mechanism, and we are disappointed to see no firm proposals on tariff guarantees to protect project developers from the risk of tariff reductions. We look forward to working closely with our members and Government to make the case for this over the coming months.”
