U.K. government to introduce a feed-in tariff scheme


Lord Hunt, Minister
of Energy and
Climate Change
London, U.K. — (METERING.COM) — February 2, 2010 – Powers in the Energy Act 2008 will be used to introduce a system of feed-in tariffs to incentivize small scale, low carbon electricity generation by providing a “clean energy cashback” for householders, communities and businesses, the British government has confirmed.

In its response to a consultation on feed-in tariffs, the government says that the feed-in tariff scheme is intended to encourage deployment of additional small scale low carbon electricity generation, particularly by parties who have not traditionally engaged in the electricity market. For these investors, a mechanism which is easier to understand and more predictable than the Renewables Obligation, as well as delivering additional support required to incentivize smaller scale and more expensive technologies, were the main drivers behind its development.
The scheme is set to start from April 1, 2010, and it is expected that by 2020 it will support over 750,000 small scale low carbon electricity installations and will have saved 7 million tonnes of carbon dioxide.

The feed-in tariffs will consist of two elements of payment made to generators, and paid for by licensed electricity suppliers. These are the generation tariff, which differs by technology type and scale, and will be paid for every kilowatthour of electricity generated and metered, whether used onsite or exported to the local electricity network; and the export tariff, which will either be metered and paid as a guaranteed amount, or will, in the case of very small generation, be assumed to be a proportion of the generation in any period without the requirement of additional metering.

The largest suppliers, known as mandatory FITS suppliers, will be obliged to offer feed-in tariffs, whereas smaller suppliers may participate if they wish. Further the tariffs will be linked to the U.K.’s retail price index (RPI), and tariff income for domestic properties generating electricity mainly for their own use will not be taxable.

The maximum capacity for the scheme will be set at 5 MW. Initially from its launch the scheme will support new anaerobic digestion, hydro, solar photovoltaic (PV) and wind projects up to the 5 MW limit, with differing generation tariffs proposed for different scales of each of the technologies. The scheme will also support the first 30,000 micro combined heat and power (mCHP) installations with an electrical capacity of 2 kW or less, as a pilot program. However, the scheme will not initially support solid and liquid biomass technologies, and these will continue to be supported under the Renewables Obligation at all scales.

“(The scheme) will trigger a small scale electricity revolution, bringing the direct benefits of renewable electricity to the wider general public,” said energy and climate change minister Lord Hunt in the introduction to the government response document. “Engaging more people in directly tackling climate change this way should help bring about greater acceptance of the behavioral changes that we need to make. I also believe that those who generate their own electricity, are likely to value it more and use it more responsibly and efficiently.”