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DECC responds to consultation with new feed-in-tariff rates

Contrary to what we have recently discussed, The Department of Energy and Climate Change (DECC) have, today, published a further response on the feed-in-tariff consultation whereby the new feed in tariff rates will come into effect from the 8th February 2016.

For systems up to 250kW the government believes that the new rates will offer a high return rate of 4.8% than originally proposed in August 2015.

Tariffs (p/kWh) Installed Capacity Consultation Tariffs New Tariffs (Jan 2016)
1
< 10kW 1.63 4.39
10 - 50kW 3.69 4.59
50 - 250kW 2.64 2.70
250 - 1000kW 2.28 2.27
> 1000kW 1.03 0.87
Standalone 1.03 0.87

Given the approaching Christmas break, the changes cannot come into effect until 8th February 2016 and the government have also imposed a four-week pause on new installations prior to this from 15th January 2016 to 8th February 2016. The pause is being implemented to protect the new budget allocation of £100 million.

As a result, all new installations completed during the four week pause will not be eligible for the current FiT rates but will receive the new rates from 8th February until 31st March 2016 before quarterly digressions begin.

Deployment caps are also detailed in the DECC response and will be introduced on a quarterly basis in line with the FiT digression. The deployment caps are still deemed to be the 'most robust' method of cost control to stay within the total spend of £100 million per year allocated from April 2019.

  2016 2017 2018
Maximum
Deployment (MW)
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
PV < 10kW 48.4 49.6 50.6 51.7 52.8 53.8 54.2 55.9 57.0 58.0 59.1 60.1
10 - 50kW 16.5 17.0 17.4 17.8 18.2 18.6 18.7 19.4 19.8 20.3 20.7 21.1
> 50kW 14.1 14.5 14.9 15.4 15.8 16.2 16.4 17.1 17.6 18.0 18.5 19.0
Standalone 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0 5.0

If the cap is reached during a quarter all new installations will join a new queuing system until the next quarter and next cap begins. The new queuing system does not guarantee which FiT rate an installation will receive or if a FiT payment will be received until they are registered under a cap. A 'rollover' clause has, however, been included by the DECC which means if the number of installations falls short of the maximum deployment cap for a particular quarter, the remaining capacity will be added to the next quarter.

It is possible that the new rates will be revisited. If the deployment were to fall significantly and the £100 million budget not be fully utilised a 'budget reconciliation' will occur which could potentially call for a review of the feed in tariff rates.

Read the full consultation here

So, what do we think here at Discover Energy?

Overall, we believe it is a positive outcome in comparison to the 87% cut we were originally expecting from the announcement in August 2015. Our only concern regarding the recent announcement is the new queuing system and capacity deployment caps is handled correctly. We are investigating this further and contacting the government to confirm how they plan to deal with this fairly.

Solar PV is still a viable option

Solar PV is already set to be the first renewable energy technology to stack up without any subsidy. Therefore, any additional tariff the government offer is regarded as an added bonus for commercial and agricultural businesses with energy usage.

Since the original proposed consultation was announced in August 2015, Discover Energy have been working closely with leading experts to develop innovative solutions to help maximise the benefit of a Solar PV which in turn will help combat a time when there will be no feed in tariff and different ways to approach energy requirements.

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