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Clarke Willmott on the Feed-in Tariff
3:47pm Friday 24th February 2012 in Farmer
THE Feed-in Tariff (FIT) is a hugely popular subsidy for small generation plant because, in theory, it is simple.
You install one of a number of small-scale technologies, switch it on and get paid a specified amount for the next 20 or 25 years.
You get paid this amount for every kilowatt hour produced even if you consume the lot.
But the Government decided last year to change the amount paid for two technologies.
It increased the subsidy for anaerobic digestion because take-up was low, and it slashed the subsidy for solar PV because take-up was high.
Then the Government decided solar PV really was getting taken up too fast, so it reduced the subsidy again.
It did so in a way which caused the industry to take it to court. The industry won, so the Government appealed. It lost.
It is appealing again to the Supreme Court. If it wins the cuts it proposed will be effective from last December, and if it loses they will be effective from next March.
Then the Government decided it had better make sure the solar PV cuts really were deep enough, so it has proposed a whole new raft of tariff reduction measures, beginning with yet new cuts next July and further cuts every six months or so after that.
The rules of these new changes are not yet settled and won’t be for some time.
The Government has also proposed changes to the FIT level for other technologies, notably small-scale wind.
Just as with solar PV, it is looking to the future and at a fairly constant degression of subsidy levels.
In the midst of this uncertainty, farmers and small-scale developers are thinking about a different form of subsidy for their schemes – the Renewables Obligation, or the ROC scheme.
It’s a harder scheme to manage because the electricity generated must be sold to an independent buyer and the subsidy elements must also be sold, preferably not to the same independent buyer.
It isn’t always possible to use the ROC scheme in place of the FIT scheme, nor is it always desirable.
And what’s true next March will not be true next July, nor every six months or so after that.
Come and talk to us before you do anything, and let us help steer you through the minefield.
You contact Tom via email on tom.hyde@ clarkewillmott.com or call 0845-209-1165