Small-scale wind projects under threat

Feed-in Tariff (FiT) support needs urgently reforming to stop the unfair penalisation of small-scale wind projects, industry body RenewableUK has warned.

The organisation’s annual report says the 2012 FiT review, which merged tariff bands for turbines smaller than 100kW and introduced a capacity-driven system of tariff cuts, has significantly damaged uptake, particularly in the sub-50kW category.

Renewable consultant CKD Galbraith has gone further, warning the 20% tariff degression from this April will further compound the pressure and with further cuts likely and no significant cost savings, most new small wind turbine projects may be unviable within three years.

“Degression is having a crippling effect on the viability of some projects over very short timescales compared with the length of time from project conception to commissioning,” says Mike Reid, CKD’s head of utilities.

“Unless savings are made, degression will mean an end to single wind turbine developments in the foreseeable future. There are viable projects at higher wind speeds, but action should be taken now to maximise development opportunities.”

RenewableUK’s report shows around one-fifth of small turbines were installed on farms in 2014, while 60% of medium-size wind ownership was on farms.

The sub-15kW turbine sector has been worst affected by tariff cuts, with annual deployed capacity of 1.5-15kW turbines at just 2.31MW last year, down from 8.43MW in 2012. That is in stark contrast to annual capacity in the 100-500kW sector, which has grown from 9.02MW to 69.78MW.

Average turbine size in the small and medium wind sector has increased as a result, from 10kW in 2012 to 40kW in 2014.

The report calls on government to reinstate the 15kW FiT bracket and introduce a slower rate of support degression for the sub-500kW wind sector when it reviews FiTs later this year.

CKD Galbraith estimates a project commissioned under the 2015-16 FiT will receive only 64% of the generation tariff received by an identical turbine commissioned under the 2013-14 rates (see table), resulting in a cumulative reduction in income over 20 years of more than £480,000 for a 100kW turbine and more than £2m for a 500kW turbine.

The report also predicts more medium-size wind turbines installed off-grid due to the difficulties with mains grid connection.

Generation tariff comparison

  100kW Turbine 500kW Turbine
Commissioning year 2013/14 2015/16 2013/14 2015/16
2015/16 generation tariff (p/kWh) 22.59 14.45 18.83 12.05
Estimated annual output (kWh) 300,000 300,000 1,500,000 1,500,000
2015/16 generation tariff turnover £67,770 £43,350 £282,450 £180,750
Annual difference £24,420   £101,700  

Source: CKD Galbraith

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