Out-Law News 2 min. read
04 Oct 2012, 9:57 am
It had previously proposed excluding new solar, anaerobic digestion, onshore wind and hydro power installations with a generating capacity of between 50kW and 5MW from the RO as of April next year. The changes, contained in a review of the Government's support for renewable published in July, would have seen the RO limited to projects over 5MW with smaller projects instead eligible for the Government's feed-in tariff (FiT) scheme.
"I am fully committed to spurring on growth in clean, green energy generation across the nation and want to provide long-term certainty for those who choose to invest," Barker said. "In light of feedback from industry on our intention to consult on the overlap between the RO and FiTs we believe that now is not the time to make further changes to these schemes. Industry needs certainty, and keeping the current arrangements for small scale renewable as they are will help provide this assurance."
The RO is the Government's main mechanism for supporting large-scale renewables, while the FiTs scheme helps people to invest in small-scale low carbon electricity in return for a guaranteed payment from the electricity they generate and use, as well as any unused surplus electricity they export back to the grid.
Energy law expert Eluned Watson of Pinsent Masons, the law firm behind Out-Law.com, said that the decision would be welcomed by the industry, particularly given the much smaller budget available under the FiTs scheme than the RO.
"The Government has taken on board widespread concerns that the proposals would have resulted in many commercial developers only being able to access financial support for small-scale renewable projects through the FiTs scheme," she said. "If the proposals had gone ahead, this would have resulted in small-scale schemes having less financial subsidies thereby constraining their cost-effective development - and investors would have been left waiting for the result of yet another consultation, making it increasingly difficult to commit to small-scale projects in the short-term."
The announcement would be particularly good news for those projects already in the pipeline when the Government made its "surprise announcement" on the proposed exclusions, she said, as the "financial feasibility" of many of these ongoing schemes may have relied on continued access to funding under the RO.
The draft Energy Bill, currently before Parliament, proposes replacing the RO from 2017 with a new system of feed-in tariffs with contracts for difference (FiT CfDs) which will offer producers of low carbon power a fixed price for energy supplied to the National Grid. Payments will be made with reference to a technology-dependent 'strike price' and a market reference price, protecting consumers by "clawing back" money from generators if the market price is higher.
The Department of Energy and Climate Change (DECC) said that it would "continue to work with industy and other interested parties" on the long term future of its support for renewables as it proceeded with the move away from the RO to Contracts for Difference.
