Proposals from the Department of Energy & Climate Change (DECC) to remove pre-accreditation and pre-registration from the Feed-in Tariff (FiT) scheme have the potential to kill off popular sectors of the renewables industry, according to the Renewable Energy Association (REA).
At present, renewable energy projects have the guarantee of getting the existing tariff, weighted depending on the size and nature of the project, if they pre-accredit.
However, if DECC’s changes are made, projects will only qualify for the tariff at project completion, meaning they will have to gamble on the level of support they will receive through the construction process.
Moreover, says the REA, developers with long lead times, such as those in the anaerobic digestion industry, will struggle to find financial backing with the added risk created by the lack of pre-accreditation.
The proposals, which have been defended as ‘a commitment to value for money’, have undergone a consultation process, but the REA describes it as ‘inadequate’, questioning ‘how a consultation with the intention of saving money can be useful without knowing how much will be saved and how’.
Plans will kill, not slow down, deployment of new projects
Responding to the proposals, REA’s Head of Biogas, Dr Kiara Zennaro, said: “DECC needs to urgently acknowledge that removing FiT pre-accreditation and tariff guarantees will be seriously detrimental to the AD sector.
“It will considerably increase the uncertainty of tariffs due to degression and make it impossible for investors to fund development and construction. In other words, it will kill deployment, as opposed to just slow it down.”
While value for money seems to be the reasoning for DECC’s plans, the REA says that the risks of financing will mean that fewer projects will be delivered for a higher cost, therefore representing worse value for money.
The REA also predicts that community, school and local authority projects will suffer as a result of changes, as internal processes would make such a gamble on future rates for renewable projects virtually impossible to commit to.
Head of Policy and External Affairs James Court said: “Many communities, local authorities and schools are wanting to do the right thing in installing renewable projects, and the government have previously seen this as an area they want to support.
“Yet this change will severely hit any such organisation, who by their nature have longer processes. For many, this will now be a non-starter – they couldn’t take the risk.”
Welsh minister joins criticism of FiT changes
Welsh Resources Minister Carl Sargeant has also stressed that the changes would cause harm to the renewables sector and, alongside Scottish Energy Minister Fergus Ewing, has sent a letter to UK Energy Secretary Amber Rudd warning of the damage she risks doing.
Speaking during a visit to the Anafon Hydro Scheme – a £1.25-million community hydroelectric generating plant – Sargeant said: “The Abergwyngregyn scheme was able to be built because it was based on sound finance and investor confidence.
“The alarming proposals by DECC will make it harder for companies to attract investment into low-carbon, renewable technologies… [and] make it much harder for communities to benefit from local renewable energy opportunities in the future.”