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Feed-in-Tariffs – what has happened?


At Old Mill, we have been enthusiastic about the coming of the new Feed-in- Tariff regime to incentivise small scale producers of “green” energy.


Mark Neath,


Associate Director, Renewable Energy


On 1 April last year, the new regime came into being, guaranteeing long-term attractive rates of return to developers of wind farms, solar photovoltaic (PV) and the like. Since then, we have seen a huge amount of interest from farmers and landowners, many of whom have also been approached by developers wanting to lease land, particularly for large-scale solar farms.


Unfortunately, there has been so much interest in solar farms that the Government has become concerned that developers and speculators are “cashing in” on the feed in tariff at the expense of individual householders who may find the “tariff pot” has all been used. Whether this is a sensible argument is a matter of debate, which hinges on whether the purpose of the FIT scheme is to help the Government meet its EU obligations to generate 15% of the nation’s energy from renewable sources by 2020; or whether it is there to assist householders in generating their own power.


Obviously, fewer large schemes are a much more efficient and effective way of hitting the 2020 targets but announcements from the Department for Energy & Climate Change (“DECC”) make it clear that the current view in government is that support should be targeted at households. There are other factors which are at play though, in particular the debate over land use and food security, not to mention local concerns over visual impact. As a result of this apparent shift in government policy, in February, less than one year into the “guaranteed long term” FIT programme, DECC announced a


“... we have seen a huge amount of interest from businesses and landowners


particularly for large- scale solar farms.”


review of the FIT regime, and with fast-track action to be taken on large-scale solar PV projects. The outcome will not be certain until July this year, but the consultation just published (behind timetable) proposes a reduction in FITs from August 2011 for large (over 250 kW) and field-scale solar PV projects to only 8.5p, equivalent to the payment under the previous support system (renewable obligation certificates) and a level at which few, if any, projects are likely to be financially attractive. Even larger roof-scale schemes will see a reduction to 19p (50-150kW) or 15p (150- 250kW) if the consultation is implemented.


It is not all bad news though. The review only affects large-scale solar this year; smaller solar and other technologies are still eligible for FITs at the original level, which remains very attractive, and anaerobic digestion projects are even seeing an increase to 13 or 14p/kWh. If you have the resource and think generating your own power could be right for you, then there is still every reason to go for it.


Old Mill can help of course. We couldn’t tell you which PV panel or inverter is right for your project, nor how high a wind turbine ought to be, but we are one of only a handful of West Country accountants with the knowledge and experience to assist you with the financial modelling, fund raising and above all, sense checking what the sales person is trying to sell you, by ‘benchmarking’ against other projects we have worked with.


If you would like further information, we have a renewable energy brochure available on our website.


The Economics of On-Farm Renewable Energy


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