Feed-in Tariff Review – Update

Posted on 14th October 2015 by Alex Heys

The feed-in Tariff (FIT) for microCHP has been left unchanged in proposals made by DECC for the consultation started in August, despite significant proposed reductions under the scheme for solar PV. This is good news for the microCHP industry and will continue to support microCHP deployment.

On the 27th of August 2015 the UK’s Department of Energy and Climate Change (DECC) announced a consultation on FIT, the incentive programme that encourages the deployment of microgeneration including solar PV, wind, hydro, anaerobic digestion and microCHP. Having attended DECC’s FIT consultation workshop it is clear that they are focusing on PV as a means of reducing the budget for the scheme.  The scheme has seen more than 600,000 PV installations since its start in 2010 compared to 600 microCHP installations. It is funded through the Levy Control Framework (LCF), an agreed mechanism that shares the cost of renewable and low carbon incentives across everyone’s energy bills, not from direct taxation as the case with the Renewable Heat Incentive. The forecast is for the budget to breach the 20% head room reaching more than 11 billion pounds by 2020, equating to approximately £18 on everyone’s annual energy bill. Comparatively, the microCHP element of the budget is less than 1%, and therefore plans to reduce the forecast costs are focusing on solar PV and wind where largest deployments have been seen and the lion’s share of the budget has been allocated.

In a recent speech Amber Rudd MP, Energy Minister, said, “I believe there is an important role for governments to create the environment for businesses to flourish, innovate and bring down the costs of new technologies, so that overtime they can compete on a level playing field with established technologies. That is why, within the UK, we focus our support on those technologies that are still maturing, and where industry and Government can work together most effectively.”

This approach reflects DECC’s view that solar PV is getting close to grid cost parity and that the FIT scheme has been successful in creating the PV industry in the UK, a model that can be repeated for microCHP.

For the first time DECC has also included in the consultation questions about the future and dynamic export tariffs reflecting the real wholesale electricity costs. This is being proposed in line with the roll out of smart meters which would be beneficial for microCHP as its generation is when households have their heating on, which coincides with winter peaks in electricity demand, greater strain on the power network and correspondingly higher wholesale prices.

The consultation closes on the 23rd of October 2015 and changes are likely to be announced towards the end of November, with implementation beginning early in 2016.

Alex Heys Author: Alex Heys Google+
Head of Marketing and Communications at Flow: A true believer in the power of words and the importance of the experience.


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