Feed-in tariffs in the United Kingdom
Encyclopedia
Feed-in tariffs in the United Kingdom were announced in October 2008 and took effect from April 2010. They were entered into law by the Energy Act of 2008.
The government estimated that feed-in tariffs to support small-scale low-carbon generation would cost £8.6 billion up to 2030 and produce monetised carbon savings worth £0.42 billion.
Domestic solar has performed well in the first year, with 28,028 of the 28,614 total solar installations (totalling nearly 78MW). Wind power has the next highest installation level with 1,348 (20.4MW). Small hydro had 206 (12.1MW), although many were not new installations, but had been transferred from the Renewable Obligation scheme. Micro-CHP had 98 installations (0.09MW), and Anaerobic Digestion (AD) had just 2 (0.66MW). AD is under scrutiny at present (April 2011) to determine why development has been so poor.
The study suggests that technologies have a variety of factors affecting their performance in terms of installation levels. The factors include cost, size, availability, standardisation of the technology, planning issues, ease of installation, perceived sensory impact (sight, sound and smell) and administrative complexity. Domestic PV scores very positively on all these factors, while small hydro and AD do far less well.
The proposed changes to the tariff levels for PV have been met with anger by many in the solar industry, but the FIT policy, along with the Green Investment Bank and now carbon reduction targets, are widely understood to be threatened by the Treasury department. This is due to the schemes being considered as liabilities on the national balance sheet.
announced that support for large-scale photovoltaic installations (greater than 50kW) would be cut. From August 1, 2011 the rate for installations over 50kW will range from 19p/kWh up to 8.5p/kWh for the largest qualifying installations (5MW), with the Government claiming that this would prevent the scheme from becoming 'overwhelmed'.
A feed-in tariff for farm
-scale anaerobic digestion
of either 14p/kWh or 13p/kWh is being introduced from August 1, 2011, depending on the installation size.
On 31 October 2011 a second review of the Feed in Tariffs for low carbon electricity generation was announced which is likely to take effect from 12 December 2011. The rates for small photovoltaic installations have been reduced from 43.3p/kWhr to 21 pence/kWhr. The reason for the second review is that FITs for PV were being taken up too quickly and that the DECC funding allocation for FITs was in danger of being exceeded. A further reason is that the cost of installing PV panels has reduced by around 50% and therefore the FITs had become less of an encouragement to install PV panels and more of an incitement to profit from excessive subsidies. See revised tariff tables for FITs.
for renewable heat
is being introduced in November 2011.
There has also been criticism of the high rates for FITs compared to those for the Renewable Heat Incentive
: the renewable heat technologies are more economic than renewable electricity generation so the government could save carbon much less expensively by increasing the RHI on ground source heat pumps (at 4.5 pence/kWhr) compared to up to 21 pence/kWhr for photovoltaic or up to 36 pence/kWh for wind turbines.
Scope
The Feed-In Tariff applies to small-scale generation of electricity, paying a fixed sum for eligible technologies. Payments through the mechanism are intended to replace the ROCs available through the Renewables Obligation for small-scale renewable energy generators and is based on a few key elements:- The tariff is available only to renewable sources producing up to 5 MW power. Specific rates are set for different technologies and at different scales of installation for those technologies. Generators of renewable electricity larger than 5MW remain eligible to earn Renewables Obligation Certificates within the existing Renewables Obligation quota mechanism. To prevent companies from moving large scale (for example big wind) projects from the ROCs to the Feed-in Tariff programme, a number of anti-gaming provisions have been inserted in the policy design; this should avoid the breaking up of bigger projects into several small ones, to fit within the 5 MW energy size cap.
- The contract term is 20 years, 25 years for solar photovoltaic projects: this means that, starting from 2010, British providers of Wind Energy, Hydropower, Energy from Biomass and Anaerobic Digestion eligible for the FiT scheme will be rewarded with a tariff rate guaranteed for the next 20 years - 25 years for Solar PV generators.
- The tariff made available to generators will be subject to digression. That is, the tariff level available for new generators will decrease annually. the rate of digression will vary by renewable energy technology. The price for individual renewable energy generating plants is fixed once the plant becomes operational.
- Costs for the programme will be borne by all British electricity consumers proportionally: all consumers will bear a slight increase in their annual bill, thus allowing electricity utilities to buy renewable energy generated from green sources at above-market rates set by the government.
The government estimated that feed-in tariffs to support small-scale low-carbon generation would cost £8.6 billion up to 2030 and produce monetised carbon savings worth £0.42 billion.
Year one feedback
A new study from the University of London has assessed the first year of the UK FIT scheme through interviews with both users of the scheme and government figures. The key findings are that users have had a wide variety of experiences, depending on the technology they are working with, and that the government has very limited ambitions on small-scale renewable energy generation.Domestic solar has performed well in the first year, with 28,028 of the 28,614 total solar installations (totalling nearly 78MW). Wind power has the next highest installation level with 1,348 (20.4MW). Small hydro had 206 (12.1MW), although many were not new installations, but had been transferred from the Renewable Obligation scheme. Micro-CHP had 98 installations (0.09MW), and Anaerobic Digestion (AD) had just 2 (0.66MW). AD is under scrutiny at present (April 2011) to determine why development has been so poor.
The study suggests that technologies have a variety of factors affecting their performance in terms of installation levels. The factors include cost, size, availability, standardisation of the technology, planning issues, ease of installation, perceived sensory impact (sight, sound and smell) and administrative complexity. Domestic PV scores very positively on all these factors, while small hydro and AD do far less well.
The proposed changes to the tariff levels for PV have been met with anger by many in the solar industry, but the FIT policy, along with the Green Investment Bank and now carbon reduction targets, are widely understood to be threatened by the Treasury department. This is due to the schemes being considered as liabilities on the national balance sheet.
Reviews to Feed-In Tariff Rates in 2011
Less than a year into the scheme, in March 2011 the new coalition GovernmentCameron Ministry
David Cameron is Prime Minister of the United Kingdom, after being invited by Queen Elizabeth II to form a new government after the resignation as Prime Minister of Gordon Brown on 11 May 2010. Leading a coalition government formed by the Conservative Party and the Liberal Democrats, the coalition...
announced that support for large-scale photovoltaic installations (greater than 50kW) would be cut. From August 1, 2011 the rate for installations over 50kW will range from 19p/kWh up to 8.5p/kWh for the largest qualifying installations (5MW), with the Government claiming that this would prevent the scheme from becoming 'overwhelmed'.
A feed-in tariff for farm
Farm
A farm is an area of land, or, for aquaculture, lake, river or sea, including various structures, devoted primarily to the practice of producing and managing food , fibres and, increasingly, fuel. It is the basic production facility in food production. Farms may be owned and operated by a single...
-scale anaerobic digestion
Anaerobic digestion
Anaerobic digestion is a series of processes in which microorganisms break down biodegradable material in the absence of oxygen. It is used for industrial or domestic purposes to manage waste and/or to release energy....
of either 14p/kWh or 13p/kWh is being introduced from August 1, 2011, depending on the installation size.
On 31 October 2011 a second review of the Feed in Tariffs for low carbon electricity generation was announced which is likely to take effect from 12 December 2011. The rates for small photovoltaic installations have been reduced from 43.3p/kWhr to 21 pence/kWhr. The reason for the second review is that FITs for PV were being taken up too quickly and that the DECC funding allocation for FITs was in danger of being exceeded. A further reason is that the cost of installing PV panels has reduced by around 50% and therefore the FITs had become less of an encouragement to install PV panels and more of an incitement to profit from excessive subsidies. See revised tariff tables for FITs.
Related schemes
In addition to the feed-in tariff, a similar incentive - the Renewable Heat IncentiveRenewable Heat Incentive
The Renewable Heat Incentive is a payment system for the generation of heat from renewable energy sources introduced in the United Kingdom on 28 November 2011...
for renewable heat
Renewable heat
Renewable heat is an application of renewable energy and it refers to the renewable generation of heat, rather than electrical power ....
is being introduced in November 2011.
Free Solar
The scheme has created a large number of start up companies providing free electricity in return for installing solar panels on the home owners roof. However if the home owner can afford the capital outlay it is more cost effective to purchase the solar equipment directly. If the homeowner can not afford the capital outlay, the free solar companies offer a capital free way of getting the benefits of solar and free electricity and the main free solar providers can be compared at CompareFreeEnergy.Co.UkUnfair Treatment
There has been much criticism of the tariffs as being unequal. Those people who installed equipment before the FIT started, are given a fixed tariff of 9p per unit (9.4p from April 2011). Both the Conservatives and the Liberal Democrats pledged to reverse this in the 2010 General Election, but then reneged on this decision afterwards. The pioneers are now on a lower rate than that before FITs started, despite generating the same electricity.There has also been criticism of the high rates for FITs compared to those for the Renewable Heat Incentive
Renewable Heat Incentive
The Renewable Heat Incentive is a payment system for the generation of heat from renewable energy sources introduced in the United Kingdom on 28 November 2011...
: the renewable heat technologies are more economic than renewable electricity generation so the government could save carbon much less expensively by increasing the RHI on ground source heat pumps (at 4.5 pence/kWhr) compared to up to 21 pence/kWhr for photovoltaic or up to 36 pence/kWh for wind turbines.
See also
- Microgeneration Certification Scheme
- MicrogenerationMicrogenerationMicrogeneration is the small-scale generation of heat and power by individuals, small businesses and communities to meet their own needs, as alternatives or supplements to traditional centralized grid-connected power...
- Energy policy of the United KingdomEnergy policy of the United KingdomThe current energy policy of the United Kingdom is set out in the Energy White Paper of May 2007 and Low Carbon Transition Plan of July 2009, building on previous work including the 2003 Energy White Paper and the Energy Review Report in 2006...
- Energy use and conservation in the United KingdomEnergy use and conservation in the United KingdomEnergy use in the United Kingdom stood at 3,894.6 kilogrammes of oil equivalent per capita in 2005 compared to a world average of 1,778.0. In 2008, total energy consumed was 9.85 exajoules - around 2% of the estimated 474 EJ worldwide total...
- Climate Change and Sustainable Energy Act 2006Climate Change and Sustainable Energy Act 2006The Climate Change and Sustainable Energy Act 2006 is an Act of the Parliament of the United Kingdom which aims to boost the number of heat and electricity microgeneration installations in the United Kingdom, so helping to cut carbon emissions and reduce fuel poverty.The Act was piloted through...
- Renewable energy in the European UnionRenewable energy in the European UnionThe countries of the European Union are currently the number two global leaders in the development and application of renewable energy. Promoting the use of renewable energy sources is important both to the reduction of the EU's dependence on foreign energy imports, and in meeting targets to combat...
- Feed-in tariffs in GermanyFeed-in tariffs in GermanyFeed-in electricity tariffs have been introduced in Germany to encourage the use of new energy technologies such as wind power, biomass, hydropower, geothermal power and solar photovoltaics. Each technology is eligible for a different feed-in rate...
- Feed-in tariffs in AustraliaFeed-in tariffs in AustraliaFeed-in tariffs in Australia have been enacted by several State Governments for electricity generated by solar photovoltaic systems. Feed-in tariff are a premium rate paid to producers of renewable energy...