Renewables remain attractive for those looking to diversify. Caroline Stocks finds out the latest about government support for renewables

Feed-in Tariffs

The FiTs scheme allows people to claim cash back from licensed electricity suppliers for every kilowatt hour produced from installing small, low-carbon technologies up to a maximum 5MW limit.

Current Rates

Up to 21p/kWh is available for non-photovoltaic installations, depending on size and type of system.

An additional 4.5p/kWh is paid when any surplus is exported back to the grid. For solar systems, rates reach a maximum 15.44p/kWh for the highest rate installations with start dates from 1 December. Existing schemes will not change.

Technologies available for FiTs include wind, solar photovoltaics (PV), hydro, anaerobic digestion and domestic scale microCHP (combined heating and power) with a capacity of 2kW or less.

A domestic scale microCHP pilot will support up to 30,000 installations, with a review to start when the 12,000th installation is completed.

Outlook

In July 2012, the Department of Energy and Climate Change published its response to the government’s comprehensive review on tariffs for non-PV technologies with installation dates on or after 1 December.

It set out new tariffs, an introduction of a preliminary accreditation process and additional benefits for community projects, which came into force on 1 December. Changes to PV tariffs for new installations were made in August. Tariffs for existing installations remain the same.

The government has confirmed there will be no digression reductions for solar photovolatics on 1 February 2013.

Early figures for the next quarter show deployment has only picked up marginally, so digression on 1 May for small and medium systems could also be zero too.

Renewables Obligation

The RO is the main financial mechanism the government uses to incentives large-scale renewable electricity generation. Support is granted for 20 years to balance the need to give investors long-term certainty with the need to keep consumer costs to a minimum. RO supports about 10% of the UK’s renewable energy production and is worth about £2bn/year in support to the industry.

Current rates

Suppliers present Renewables Obligation Certificates to Ofgem to demonstrate their compliance with the obligation. Where they do not present sufficient ROCs, suppliers have to pay a penalty known as the buy-out price.

This is set at £40.71 per ROC for 2012/13 (linked to Retail Price Index). The money collected by Ofgem in the buy-out fund is recycled on a pro-rata basis to suppliers who presented ROCs.

Outlook

In April 2010, the end date of the RO was extended from 2027 to 2037 for new projects to provide long-term certainty for investors and to ensure continued deployment of renewables to meet the UK’s 2020 target and beyond.

The RO will close to new generation on 31 March 2017, but generation accredited under the RO will continue to receive its full lifetime of support in the “vintaged” scheme after 2017.

Renewable Heat Incentive

The RHI provides financial support to non-domestic renewable heat generators and producers of biomethene. It provides a continuous income stream for 20 years in a bid to ensure renewable heat is commercially attractive when compared to fossil fuels.

Current rates

The rates depend on the type of system installed, but the maximum is 8.5p/kWh for solar collectors. Large commercial biomass plants (1000kWth and above) earn 1p/kWh.

  • Eligible technology
  • Biomass boilers (Including CHP biomass boilers)
  • Solar thermal
  • Ground source heat pumps
  • Water source heat pumps
  • On-site biogas combustion
  • Deep geothermal
  • Energy from municipal solid waste
  • Injection of biomethane into the grid

Outlook

The government has high hopes for renewable heat production, expecting 12% of the country’s heating to come from renewable sources by 2020.

With that in mind, it has pledged the scheme will remain open until at least 2020, with payments to non-domestic installations guaranteed for 20 years from entry to the scheme.

In September, DECC published three consultations on the RHI to help the government meet its renewable energy targets.

These include a plan to expand the non-domestic scheme to include technologies such as air source heat pumps, combined heat and power, large-scale biogas and deep geothermal. In addition, a domestic RHI scheme is set to launch in the summer.

For the most up to date information about support rates, visit the Ofgem website at www.ofgem.gov.uk of DECC’s website at www.decc.gov.uk

Do the sums add up?

Renewable energy offers a range of financial opportunities for farmers, despite apparent government reluctance around the technology, according to Jonathan Scurlock, NFU chief renewable energy advisor.

“The government’s tendency for consultations has made growth in some sectors, particularly biofuels, disappointing – not because the technology is not available, but because the government has been sending confusing messages.”

Despite the confusion, farmers should still look to renewable energy as a worthwhile and profitable diversification option, he said.

“In the solar sector they are managing despite confusing messages from government because the supply chain is cutting costs so quickly.

“As this technology is expected to become viable without government support before the end of the decade, farmers can take a serious look at it and put it on farm buildings where there’s no land cost.”

Producers using intensive systems such as indoor pigs should see a benefit of renewable heat production, despite “stifling bureaucracy”, he added.

“This has to change, as RHI has been in place for 12 months now and at some point it will look embarrassing for government that it hasn’t been a success.”

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