New Feed-in Tariff (FiT) rates announced for ‘Large Scale’ Solar PV and Anaerobic Digestion

The Department of Energy and Climate Change (DECC) has announced the revised rates for solar PV installations above 50 kW and anaerobic digestion (AD) below 500kW, which, disappointingly, are unchanged from those proposed in the consultation says Cath Anthony, of the renewables team of the UKs largest regional property consultancy, Bidwells.

The new rates (shown at the end of the release) will effect those installations with an ‘eligibility date’ after August 1, 2011. Importantly, the Government will not act retrospectively.

Whilst the ‘fast track’ consultation for a review announced on February 8 was a blow to those clients in the early stages considering large scale solar PV, Bidwells have been involved with a number of projects where they have successfully gained planning permission for 5 MW installations. It is now a race against time to get the projects installed before the August 1, deadline. We are also working on a number of smaller scale projects which fall under the 50 kW barrier says Cath Anthony, this is still large enough to cover an area of around 350 m2 and in particular provides opportunity for those with marginal land or large rooftops, such as grain stores.

For AD only a few projects have been developed under FiT and it is Bidwells belief that the influence of the review is likely to be minimal as the modest increases are not sufficient to encourage investment. However, well-placed and thought through projects remain attractive and may consider using Renewable Obligation Certificates (ROCs) as an alternative to FiT. The biomethane-to-grid tariff announced for the Renewable Heat Incentive (RHI)¹ also provides a potential alternative use of the biogas, where developers are close enough to a gas grid and the scale of plant supports the capital outlay.

The FiT was designed to provide a guaranteed return for 20 or 25 years for renewables projects installed before 2012. DECC has been heavily criticised for the uncertainty caused by the early review and Bidwells have seen first hand the reluctance by funders and developers due to lack of confidence.

Whilst the review is likely to cause developers to abandon their plans for large scale solar PV installations, well located renewables projects continue to be attractive and potentially provide very good returns. It remains prudent to ensure that a project is feasible and viable from the outset. Banks and other funders do appear to be becoming more active in the renewables arena, realising that they cannot wait for government announcements forever and are continuing to expand on their expertise whilst undertaking detailed due diligence to ensure projects are fundable.

Whilst the ‘Fast track review’ considered small scale AD and large scale solar PV, there will also be a review of all other aspects of the FiT scheme, by the end of the year, although tariffs are unlikely to change until April 2012.

It will be interesting to see the results of the review (and the RHI due to be introduced later this year for certain renewable heat generating technologies) and whether the government will prove it’s claims to be ‘the greenest government ever’ says Cath Anthony.

[1] The RHI will provide a payment for every unit of heat produced from eligible renewable technologies. Stage one is due to start in July 2011 with Stage two implemented in October 2012. The scheme will support projects installed after 15 July 2009

The new rates are:

For Solar PV:

>50 kW ? 150 kW – 19.0p/ kWh (down from 32.9p/ kWh for >10 kW ? 100 kW1)

>150 kW ? 250 kW – 15.0p/ kWh (down from 30.7p/ kWh for >100kW – 5MW1)

250 kW 5 MW and stand-alone installations – 8.5p/ kWh

For Anaerobic Digestion:

? 250 kW – 14.0p/ kWh (up from 11.5 p/ kWh for ? 500 kW)

>250 kW ? 500 kW – 1