No replacement for feed-in tariff ‘major blow’ for renewables

The government has axed subsidies for new small-scale low-carbon electricity generation, sparking dismay from renewable energy bodies.

The Business, Energy and Industrial Strategy (BEIS) department has announced that there will be no replacement for the feed-in tariff (FIT) scheme when it ends next March.

The scheme has been one of the key factors contributing to the huge increase in solar photovoltaic deployment from 100MW when it was launched in 2010 to 12.7GW at the end of last year, of which 4.8GW is supported by FITs.

FITs provide payments to owners of small-scale renewable generators at a fixed rate per unit of electricity produced, enabling the cost of installation to be recouped.

A consultation paper, published today (19 July), states that there will be no direct subsidy available for new small-scale low-carbon generation, which will have to compete on the open market to sell surplus power.

BEIS will examine changing the capacity market rules to allow the participation of low-carbon generation, which is currently excluded due to its access to other forms of subsidy, according to the paper.

It says: “Consumers should not be expected to support sectors indefinitely and that as costs fall, so too should support.

“We do not believe that the current FIT flat rate export tariff aligns with government’s vision for the future, given our desire to move towards fairer, cost reflective pricing and the continued drive to minimise support costs on consumers.”

However, the consultation paper also states government intervention may still be required to support solar and wind projects.

It says there may not be many sites big enough and benefiting from easy access to grid connections or storage, like the first subsidy-free solar farm at Clay Hill, able to operate without support.

Smaller renewable generators “may struggle” to sell their surplus electricity without access to FITs because the existing power purchase agreement market is “limited” and does not cater for micro-generation.

Responding to the government’s announcement, Renewable UK’s executive director Emma Pinchbeck, said: “Today’s confirmation that there will be no replacement for the feed-in tariff is a major blow to small-scale renewables in the UK. The government has known the FIT would be closing for three years and the fact that they are only now beginning the conversation about new policies is far too little, far too late for many companies.”

Hannah Smith, senior policy manager at Scottish Renewables, said there had already bean a drop off in deployment of small-scale low-carbon generation since the support available via FITs was cut back in 2015.

She said: “Government proposals to close the scheme in its entirety, by its own admission, risk both jobs in the sector and decreases in deployment levels of small-scale low-carbon generation

“At a time when we need to make our energy system smarter and develop a strong post-Brexit economy, denying a future for these technologies makes no sense.”

Solar Trade Association chief executive officer Chris Hewett, said: “Government has been crystal clear today on what policy measures will stop – even very basic rights to fair export payments – but they are frighteningly vague on what comes next.

“There is real dismay that there is now a serious and needless policy gap between the end of FITs and the start of the new regime.”