Getting the Feed-in-Tariff Right
The DECC objectives of the FiT are to: encourage deployment of small-scale (up to 5MW) low-carbon electricity generation, particularly by non-traditional players in the electricity market in order to:
- Empower people and give them a direct stake in the transition to a low carbon economy;
- Assist in public take-up of carbon reduction measures; and
- Help develop local supply chains and drive down technology costs.
Small and medium wind deployment achieves all of the above objectives.
Installing a small scale wind turbine can be very valuable to both farms and businesses, diversifying income and reducing on-site electricity costs. The UK is a world leader in the manufacturing of micro and small scale wind turbines and this results in vast UK benefits such as job creation, GVA and supply chain opportunities.
The Feed-in Tariff was introduced in 2010 and the first two years of the scheme successfully encouraged significant uptake of microgeneration.
In 2012, the government undertook a review of the Feed-in Tariff and introduced new support rates and brackets for small and medium scale wind. Alongside this, the government also introduced degression rates — effectively step reductions in support which are triggered when a certain amount of capacity is developed.
RenewableUK is concerned by the structure of the Feed-in Tariff, specifically the removal of the 15kW FiT bracket. It is also concerned that the degression thresholds have not been appropriately set.
In combination, we believe that the scheme is encouraging a short-term market in which early entrants are rewarded, instead of supporting a market which builds out for the longer term — including growing UK manufacturing of small scale wind systems where the UK is a world leader.
In 2015 the government will be reviewing the Feed-in Tariff system and setting new tariff rates and processes.
RenewableUK has highlighted to government the areas of the FiT mechanism that urgently require change. A full list of recommendations can be found in the Small and Medium Wind Strategy. RenewableUK will continue to engage with government leading up to and throughout the FiT review process.