Feed-in tariffs for non-PV systems
Ardenham Energy has welcomed the information from DECC last week that clarifies the Feed-in tariff (FIT) mechanism for non-PV, small scale renewable energy technologies.
FIT is already widely used to support the installation of solar PV. Now the tariffs for other technologies that produce green electricity such as anaerobic digestion, small scale wind, hydroelectric and micro combined heat and power (CHP) systems have been published. These technologies will be eligible to receive FIT from December 2012.
James Hoare, managing director Ardenham Energy, says:
“Any additional clarity about the feed-in tariff helps investor confidence. We are particularly pleased to hear also that community projects and schools will be freed of any requirement to meet a particular energy efficiency standard before they can install solar PV. This opens up significant benefits to local communities.
“DECC has confirmed that larger solar schemes and longer lead-time renewable energy projects will get pre-accreditation so that developers can have greater certainty about the FIT. They will be able to claim the rate that was in force at the time of their application once planning permission, grid connection and relevant environmental permits are in place, rather than having to wait until construction is complete. This will help to stop the dysfunctional stop-start nature of this market that has affected so many installers this year.”
Looking ahead to the scheduled reductions in FIT for solar PV on 1 August and beyond, James Hoare adds:
“Looking at the degression tables in more detail, it looks like a lot of our customers won’t be badly affected – projects that fall within the 10-50 kWp market, typically commercial property, social housing and farm installations, are not tipping over the threshold for FIT reductions.
“But the capital cost of solar PV is no longer reducing as fast as it was. Most profit margins have been pared to a minimum, silicon is now a lower proportion of panel costs, and other raw materials costs are now rising in line with global commodity demand. So DECC should look again at the planned FIT cuts, especially for the 0-10kWp domestic market. A moratorium on future cuts would be sensible this autumn.”
Renewable Heat Incentive
Alongside the announcement on non-PV feed-in tariffs, DECC also published a consultation paper on its proposed long-term budget management of the non-domestic Renewable Heat Incentive (RHI) scheme.
The RHI currently provides financial support for non-domestic projects using renewable heat technologies such as heat pumps, biomass boilers and solar thermal panels. An additional consultation on how to extend the scheme to housing will be announced in September, with a view to rolling it out the RHI to the domestic market in summer 2013.
Commenting on the RHI consultation, Neil Lawson, head of renewable energy at Ardenham Energy, says:
“DECC’s latest proposals on how it will support technologies such as ground source heat pumps are very similar to the way the FIT is now managed for solar PV projects, with a system for announcing degressions at pre-determined trigger points if there is greater than expected uptake.
“The problem is, renewable heat is not like PV. It’s a far more challenging technology and will remain so.
“PV can be seen as a nice-to-have, a non essential add on which is mounted externally on buildings. In contrast, how we heat our buildings is absolutely fundamental to the building’s design and construction. It influences the fabric and the daily operation of that building.
“With solar PV, you can turn around an installation in less than eight weeks. Heat pumps and other renewable heat schemes can take up to six years to come to fruition. We are currently working on four jobs that were conceptualised four years ago and are only now entering the construction phase.
“Renewable heat technologies won’t benefit from the huge global economies of scale experienced with PV panel manufacture over the last 18 months. The capital costs will remain high, so what is needed is a much simpler grant system that will make such schemes viable.”
Ardenham Energy will publish its detailed response to the RHI consultation later this summer. The deadline for responses is 14 September.