Cutting the Feed-in Tariff for renewable energy technologies other than solar could potentially “kill” the growth of small-scale energy generation such as wind and biogas, the NFU has warned.
Responding to Department of Energy and Climate Change’s (DECC) consultation on the proposed cuts, which closed last week, the union said cutting support for renewables other than solar PV at a rate faster than that originally announced in 2010 was not appropriate as those technologies were not subject to the same rapidly falling costs as solar.
While it agreed in principle with tariff reductions subject to levels of deployment, degression rates had to reflect real market prices, rather than a blanket expectation that all costs would decrease annually.
For smaller-scale wind power (under 100kW), the originally proposed degression of 9% per year from FiT year three would be accelerated with further cuts of 20-25% or more from October 2012, and all technologies would be subject to a minimum 5% per year reduction from 2014.
“In the absence of dramatic UK market growth (which is evidently not happening), this will create very challenging market conditions for technologies with limited scope for further cost reductions, and could perversely ‘kill’ the growth of all small-scale generation apart from solar PV.”
The NFU said the proposed October reduction in rates should be delayed to allow the market time to adjust. “A staged reduction in small wind tariffs (eg 10% in October 2012; 10% in October 2013) has been suggested by RenewableUK, and would again be preferable to an early drastic reduction.”
It also said that FiTs should continue to be index-linked for all technologies. “This is one of the key features distinguishing the FiTs from a more risk-based incentive mechanism such as the Renewables Obligation, attracting investment by small-scale generators with secured loan finance.”
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