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The government’s decision to pull subsidy pre-accreditation for renewables developers could pose a huge setback to business users looking to invest in demand-side management.
The government said on Wednesday that it will withhold a guarantee of future subsidy levels for projects in the early stages of development from October, a move branded by the Solar Trade Association (STA) as “the antithesis of a sensible policy”.
But npower business solutions director Wayne Mitchell says the change in policy may also stifle the growing trend for business users to invest in demand side management.
Increasingly, business users are opting to invest in small-scale, decentralised energy sources in order to avoid depending on tight grid supplies at times of high wholesale prices. But opting to move forward with these investments without being able to lock-in a guaranteed return is a riskier prospect.
“Renewable generation is often a major financial commitment and without the certainty of a fixed FiT, it’s likely that some businesses will have to rethink their investment plans,” Mitchell said, adding that it would be a “huge set-back” for businesses with projects already in the works.
“Pre-accreditation is critical to ensuring that viable projects go ahead and that demand side management can continue in the long-term,” Mitchell said.
The government’s move aims to protect energy bill payers against spiraling costs of supporting low carbon development. At the same time the government is carrying out a public consultation on whether to close the FiT to new applicants by January 2016 if cost control measures are not implemented or prove to be ineffective.
These cost control measures include introducing new tariffs based on fresh evidence about the costs and rates of returns on solar, wind and hydropower technologies. This could see support for solar scaled back by up to 86 per cent, and some subsidies for onshore wind removed completely.
The removal of pre-accreditation will only apply to new participants in the FIT scheme from 1 October.
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