The Government has announced that it intends to bring the Feed-In Tariffs scheme (FIT) to an end, with closure of both the export tariff and the generation tariff. This decision follows widespread consultation with various stakeholders, and follows an intention to close the generation tariff first declared back in 2015.
FIT has enabled electricity producers from renewable sources to receive payments in two ways:
- The ‘generation tariff’, whereby a generator is paid for the amount of electricity generated (even if it is used by the generator); and
- The ‘export tariff’, whereby a generator is paid for the amount of electricity they export to the electricity grid.
When it comes into Effect
No new applications for accreditation under FIT will be accepted after 31 March 2019. However, those already accredited will continue to receive FIT payments under their existing terms. Furthermore, there are a number of time-limited extensions (provided that an application for pre-accreditation is made on or before 31 March 2019):
- Renewable Obligation Order Feed-In Tariff (ROO-FIT) – larger systems accredited under the ROO-FIT process will benefit from extended validity periods to convert to full accreditation. Solar PV generators will have 6 months; anaerobic digestion will have 12 months; wind will have 12 months; and hydro will have 2 years. ROO-FIT scale community installations will get an additional six months on top of the referenced time frames.
- Microgeneration Certification Scheme (MCS) – smaller systems accredited under the MCS will get the standard 12 month validity period from pre-registration to apply to their FIT licensee for accreditation, provided that they are school or community installations. Moreover, MCS-scale installations other than community or school installations will have until the 31 March 2020 to apply for FIT accreditation.
There has been a resoundingly negative reaction to the government’s decision to end the export tariff and ultimately close down the FIT scheme. In particular, objection is made to generators providing excess electricity to the grid for free. Industry has also criticized the decision as having a potentially de-stabilising effect on jobs and businesses, with a lack of routes to market for small-scale generators. Many respondents also emphasized that the decision is incompatible with the need to combat climate change and meet other environmental targets.
From a policy perspective, the move is reflective of:
- A general retreat from subsidy;
- A renewed focus on reducing consumer bills;
- The increasing competitiveness of solar in the market; and
- An increasing emphasis on demand management (e.g. storage) and larger scale generation projects.
This article was co-written with BCLP Trainee Solicitor Will Martin. Please do not hesitate to get in touch with any inquiries: Will Martin