UK government threatens to end feed-in tariff scheme

The UK government has opened a consultation into the feed-in tariff (FiT) scheme that proposes drastic cuts and, if necessary, an end to the support framework, which would largely affect rooftop solar but also small-scale onshore wind installations.

Announcing it wants to cap FiT spending at £100 million ($154 million; €137 million) between 2016 and 2018-19, the Department for Energy and Climate Change (DECC) said if costs couldn’t be controlled, “the only alternative would be to end generation tariffs for new applicants as soon as legislatively possible, which we expect to be January 2016”. It added it would keep “the export tariff as a route to market for the renewable electricity they generate”.

That means renewable energy producers would stop getting a guaranteed payment for the power they generate and would only be eligible to receive guaranteed rates for the excess electricity they might be able to export to the grid.

The Solar Trade Association called the review, which could cut FiTs for solar by as much as 87 percent, “alarming” and said it was “the antithesis of a sensible policy for achieving better public value for money”. Small-scale wind, which is currently deployed in 10 percent of UK farms, is also expected to take a hit, with trade body RenewableUK saying the FiT “provided a lifeline to the rural economy”.

At its worst, the FiT changes might prevent some 6GW of renewable generation from getting developed by 2020-21. But government believes the industry should be able to withstand this latest blow: “There is a risk that these changes – combined with the separate consultation proposals to remove pre-accreditation – may result in significantly reduced rates of deployment. However, industry has proven resilient to previous significant changes to FITs, and has been able to adapt to previous tariff reductions and the introduction of degression.”

The FiT review is the latest in a series of changes to UK renewables support mechanisms that have ended tax exemptions and some subsidies earlier than expected.

This article was first published on Low Carbon Energy Investor.