Policy News

Thursday 15 October 2009

Alex Murley of the British Wind Energy Association called for the proposed FiT tariff bands to be restructured

As the consultation on feed-in tariff subsidies for renewable energy generation draws to a close today (October 15), bodies representing the renewable energy sector have called for more equality in the proposed tariffs and higher subsidies for some technologies, such as small-scale wind.

The Feed-in-Tariff (FiT) is a renewable energy subsidy offering a fixed payment per kilowatt hour of renewable energy generated, varying across technologies.

The government has been in a period of consultation on FiTs since 15 July, and has set out a range of proposed tariffs by which it proposes to support them (see this NewEnergyFocus story).

However, the Renewable Energy Association (REA), British Wind Energy Association (BWEA) and regional sustainable energy agency, Regen SW, have issued responses to the consultation calling for changes to the rates of subsidy which different projects will receive.

REA

In its response, the REA raised concerns over the rate of return - the ratio of money gained or lost on an investment relative to the amount of money invested - calling for it to be equal across all technologies.

The latest draft of the REA's response said: "We welcome the introduction of Feed-In-Tariffs and appreciate DECC's swift action to implement these proposals by April 2010.

"We do however have some concerns, it would be advisable for the rate of return across all technologies to be equal, and a 10% return on investment (ROI) is necessary to stimulate the market. A 10% ROI would engage the commercial sector, 8% will appeal to some ethical householders but will not lead to widespread deployment."

The Department of Energy and Climate Change (DECC) has proposed to set FiTs at a level which will offer projects a 5-8% return on investment.

Regen SW

Regen SW - which organised a FiTs event in Bristol earlier this month - also agreed that a 10% rate of return was appropriate in "achieving widespread uptake of the FIT amongst those requiring access to credit" and called for equality in the FiTs rates.

The agency argued that early investors should not be penalised by the FiT and should receive the same tariffs as new investors - an issue that has been raised by several organisations during the consultation period (see this NewEnergyFocus story).

In its response, the organisation said: "South west renewables businesses feel very strongly that offering existing projects a lower price than new installations and than what they can currently receive from utilities seriously undermines the credibility of their sector.

"With the FIT penalising early adopters, the goodwill of these ambassadors is likely to be lost or diminished, with negative consequences for the region's microgeneration businesses and the sector as a whole."

The company has also noted that the FiT should:
• Be index-linked;
• Not be taxed;
• Have tariffs set for less developed technologies - such as geothermal and marine energy;
• The government must have a clear communications and publicity plan to let people know about it.

BWEA

The British Wind Energy Association's (BWEA) response to the DECC consultation focused on the tariffs for micro-generation.

BWEA has asked for the proposed sub-15kW wind tariff bands to be strengthened, to maximise the potential for economic and employment growth in the micro-generation wind sector.

The trade association has also recommended that FiT tariff bands should be restructured - expanding wind Band 3 from 15-50kW to 15-100kW - to allow more projects in the small-scale wind sector to receive the proposed 20.5p/kWh tariff.

Currently the proposed wind tariffs stand at 20.5p/kWh for the 15kW-50kW band and 18.0p/kWh for the 50kW-250kW band.

Commenting on the FiT consultation, Alex Murley, head of small systems at BWEA, said: "Unlike most technologies covered by the FiT - for small wind, the UK has one of the biggest home markets in the world, and a British manufacturing industry that can more than hold its own weight in fast expanding international markets for decades to come."

"The FiT needs to grasp a rare opportunity to stimulate grass root interest in self generation of green energy, while simultaneously delivering economic and industrial value for money," he added.