Feed In Tariffs

Information on payments for renewable electricity in the UK. Infrequently updated


How are RO-linked tariffs degressed?

In principle these bands aren't subject to degression as such, but will stay linked to the equivalent RO price. The Phase 2B Review decision said:

Tariffs in the bands set at levels equivalent to the RO will not be subject to annual degression changes unless deployment in the relevant band in the previous year is greater than 150% of the expected level. However, deployment in these bands contributes to the deployment thresholds and may therefore affect degression rates in other bands. If degression is applied to these tariffs, later years’ tariffs will be determined according to the normal degression rules (i.e. were the RO equivalence in a band broken by the need for a 10% degression, normal degression rules would apply from that point on).

How are tariffs linked to pricing under the RO?

You want the simple answer? Tough!

All we can do is refer you to the wording in the Phase 2B Review decision

we will adjust generation tariffs for these bands to levels we consider to be equivalent to the support currently available under the RO. These are calculated using a value of £44.78 per ROC, which is 1.1 times the 2012/13 buyout price. Generation tariffs from 1 April 2013 until 31 March 2017 will be set at a level equivalent to the levels of support provided under the RO to a 5MW plant as a result of the RO Banding Review. Tariffs for 2017/8 and beyond are set at the level of 2016/17. However we expect that tariffs will be reviewed before this time, particularly given the wider context of Electricity Market Reform, so this should be taken as an indicative position in the interim.

Which tariff bands will be linked to pricing under the RO?

Those tariffs for sizes up to 5MW for most RO-eligible technologies.

This approach applies to the hydro band 2-5MW and the wind band 1.5-5MW.

However, the same does not seem to apply for PV, where the government said on their decision document following the Phase 2A review:

Although the majority of respondents to the consultation indicated a preference for the approach to degression to change once tariffs reach the financial equivalent of two Renewable Obligation Certificates [the support for solar PV under the RO], our updated analysis of PV installation costs suggests that a rate of return of nearly 8% can be achieved for large scale PV installations for a tariff considerably lower than 2 ROCs.
We have therefore decided that the degression mechanism should continue to operate when tariffs reach the equivalent of 2 ROCs, to minimise the risk of investor overcompensation and to limit the total cost of FITs support.

Are the tariff levels published following the Review now set in stone?

Not necessarily! From April 2013 some tariffs (for larger systems up to 5MW) may be adjusted further depending on the equivalent RO banding. The Phase 2B Review decision said:

Generation tariffs for the largest capacity band for each technology will continue to be consistent with support under the Renewables Obligation, and will be adjusted in line with current support levels and the outcome of the RO Banding Review.

What is the RO banding review?

The Renewables Obligation (RO) supports renewable generation above 5MW (and some projects between 50kW and 5MW). It provides an incentive not in the form of a fixed tariff, like the FITs, but by awarding green certificates called Renewable Obligations Certificates or 'ROCs'.

When the RO was first introduced, all technologies received one ROC for every MWh of electricity delivered. The RO has subsequently been 'banded' with some renewable technologies, such as solar PV receiving 2 ROCs per MWh. Some (like offshore wind) get 1.5 ROCs; others still get 1 ROC; while others get less than 1 ROC.

The banding review is reassessing how many ROCs should be awarded to each technology band under the RO.

Do I get FITs if I install a new system on an old RO site?

We believed so, but we asked Ofgem, just to be sure.

They confirmed:

The FITs Order does not discuss the building of new generating stations on the site of a previous station. Part 4 of the Order does however discuss extensions to accreditations. Assuming that the installation is completely new and not an extension to the previous generating station and that it does not utilise any residual apparatus from the previous generating station, it is unlikely that positioning a station on the site of a previous generating station would affect the eligibility of the station for FITs or that previous RO accreditation would have an impact.

Which is better financially for larger systems, FITs or ROCs?

The government has tried to set the tariffs for larger systems at about the same level as the RO.

The decision on which to go for will depend on your view of the administration associated with each option, and the certainty of the price you will get under each (ROC and electricity prices are both variable and can be volatile at times).

What are the arrangements for systems already registered for the RO and wanting to transfer to FITs?

Systems under 50kW and registered for the RO must transfer to the FITs.

Systems between 50KW and 5MW have the choice of whether they convert.

Systems above 5MW cannot transfer - they have to stay in the Renewable Obligation.

Can systems already registered for ROCs stay in the RO?

Only if they are above 50kW. Smaller systems will generally have to transfer to the Feed-In Tariffs.

Can the Tariffs be applied for if the company is taking part in the Carbon Reduction Commitment?

The government intends to treat energy which earns tariffs the same way as ROC-earning generation (i.e. it would not qualify as zero emissions but would have to be assigned emissions at the grid average).

The only way of getting full renewable credit under the CRC, therefore, is not to register for Feed-In Tariffs, the Renewable Heat Incentive or the Renewables Obligation.

We think this is inappropriate and are making representations accordingly.

Can builders claim FITs on installations under the Code for Sustainable Homes?

Yes they can. The government has accepted that this would be a good way of helping builders cover any additional costs in achieving Zero Carbon Buildings.

Can renewable systems claim both the Feed-in Tariffs and the Renewables Obligation?

No. Systems are only eligible for one of the schemes. Small systems will have to use the Feed-In Tariffs and large systems, above 5 megawatts, can only use the RO. Systems between 50kW and 5MW get a one-off choice of FITs or RO, but won’t be able to claim both or to chop and change.

Will grants have to be repaid?

The tariffs are available to all energy systems, whether they have received grants or not.

However, for a long time it was believed many of the grants would have to repaid if a system is to be registered for the Tariffs.

It all depended on the grant scheme:

  • LCBP Low Carbon Buildings Programme - householders (Stream 1): No need to repay
  • LCBP Low Carbon Buildings Programme - commercial (Stream 2): Yes - must repay (BUT SEE BELOW!)
  • Energy Saving Scotland Home Renewables (formerly SCHRI): No need to repay

For many other grant schemes it is still unclear if grants need to be repaid, including

  • RDPE, the Rural Development Programme for England
  • YESS, the Young Entrant Support Scheme in Wales
  • SRDP, the Scottish Rural Development Programme - Scottish Government currently awaiting clarification from DECC and OFGEM. Final decision expected by end of May

For these schemes, it will be best to ask the grant administrators.

If you get a definitive answer, please let us know!

Update on LCBP grants. In September, DECC made the following clarification on whether a LCBP2 grant needs repaying:

Final decisions on eligibility are the responsibility of Ofgem. Ofgem may not accredit for FITs any installation that has received a grant from a public body except in certain circumstances. These exemptions are:

i. Permitted grants (as specified in Article 8 of the Order) i.e. those made before 1st April 2010 in respect of the costs of:

  • an eligible installation commissioned before 15th July 2009; or
  • an eligible installation on a residential property commissioned between 15th July 2009 and 31st March 2010

ii. Those complying under de minimis regulation:

Recipients of publicly funded grants for a plant will be eligible for the FIT scheme for that plant without having to repay the moneys received if they are in compliance with the EU’s rules on de minimis aid - i.e. if they have not received support from public funds (including FITs payments) that would exceed thresholds specified in de minimis regulations (€200,000 over a period of three  years in most cases).

Note: this means that many generators who were previously expected to be ineligible for both FITs and grants e.g. under the Low Carbon Buildings Programme (LCBP) may now be eligible.

iii. Those who can demonstrate that a publicly funded grant is for justifiable non-standardised costs

Non-standardised costs are those additional costs incurred as a result of measures taken to reduce the environmental impact of an installation.

If I register for ROCs, can I receive the Feed-In Tariffs?

You cannot claim both Feed-In Tariffs and ROCs.

However, if you have a renewable energy system that was installed before July 2009 and was registered for the Renewables Obligation, you are eligible to switch to the Feed-In Tariffs.

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