Last month the government published their Autumn Budget 2017, which not only mentioned that renewable energy levies will be cut (see our previous post) but it also confirmed that the Feed-in-Tariff (FiT) will close to new accreditation at the end of March 2019.
What is the FiT?
For those of you who haven’t heard of the FiT we will give a small summary.
The FiT is a support mechanism provided by the government to encourage the uptake of various renewable energy generation. It is limited up to 5 MW and is split into tariff levels. The owner of the power supply is paid for generation of electricity and for any export to the grid. For more tariff details click here.
The scheme was introduced in April 2010 and has since seen both households and businesses become very large investors in renewable energy. A whopping 808,051 installations were accredited to the scheme by 30th November, which equates to 5,868 MW of electricity.
What’s happening right now?
As the scheme moves into its final stages the tariff is decreasing each quarter, which could be why many forecasts reveal a slump in new installations. Cornwall Insight noted that Q3 2017 had 90 MW accredited, which is the lowest in any quarter since Q2 2011, and 5,662 installations, the fewest in any quarter since Q2 2010. Other reasons for the decline in uptake is that many technology types now fall under the quarterly deployment caps set by BEIS. Since Q4 has begun (October-December) only 20 solar PV installations have been accredited, in comparison to 2,116 in September alone. Further echoing this decline is that for the first time ever hydropower had more accreditation in October than any other technology type.
What does this mean for the future?
Predictions based on historical data show that electricity demand will be lower than original predictions showed and that uptake in the FiT accreditation will also decline. After March 2019 there will be no more new applications, however, the majority of projects who have benefited from FiT will receive payments for 20 years after the commission date. This means that the first projects to receive the subsidy will do so until 2030.