Bloomberg News

U.K. Proposes New Renewable Tariffs for Small Wind, Hydro Plans

July 20, 2012

The U.K. energy department proposed new incentive rates that cut support for small-scale wind projects while making little change to small hydroelectric projects.

The changes in so-called feed-in tariffs coming into effect on Dec. 1 also cover micro combined heat and power plants and small-scale anaerobic digesters, the Department for Energy and Climate Change said today in an e-mailed statement. Rates on all technologies were largely in step with levels proposed by the government in a consultation that started in February.

“I want to provide long term certainty for those choosing to invest in all forms of small-scale green electricity generation, not just solar, and our changes to feed-in tariffs will do just that,” Energy and Climate Change Minister Greg Barker said.

The announcement brings more predictability to U.K. subsidies for small-scale renewable power after a series of cuts to curtail a surge in solar power that ministers said threatened to swamp the program’s budget. Three days ago, the department delayed a decision on assistance for larger-scale wind, wave, tidal and solar projects after a clash with the Treasury over the scale of cuts to onshore wind subsidies.

Guaranteed Rates

The tariffs for all technologies in today’s plan will also be guaranteed to give greater confidence to investors in projects which take longer to develop, Barker said.

The tariffs announced today follow new solar rates that were announced in May and take effect on Aug. 1.

In today’s announcement, the department introduced a new banding for hydropower projects from 100 to 500 kilowatts to ensure rates don’t drop off suddenly from the smallest-scale projects to larger ones.

Aside from the new hydro banding, the new rates are little- changed from those proposed in the consultation, which largely preserved existing subsidies for hydro and anaerobic digestion, raised rates for micro combined heat and power, and slashed levels for small wind turbines by as much as 41 percent. That cut was criticized by the RenewableUK lobby group.

‘Disappointed’

“We are deeply disappointed that the government has chosen to put the brakes on a sector which had the potential to employ up to 9,000 people by 2020,” Indre Vaizgelaite, the lobby group’s manager for small wind project development said in an e- mailed statement. “There is now a real risk that these jobs will go overseas.”

The new rates will now take effect from December, rather than the previous proposal for an October start date. The department also said it won’t apply requirements for the buildings to which solar panels are attached to be energy- efficient to schools and other community buildings.

The department said it will introduce a so-called degression mechanism for wind, hydro and anaerobic digestion in April 2014 that will automatically trigger rate cuts when deployment of the technologies reaches certain thresholds. New tariffs will be published two months before the reductions are made, it said.

To contact the reporters on this story: Alex Morales in London at amorales2@bloomberg.net; Sally Bakewell in London at sbakewell1@bloomberg.net

To contact the editor responsible for this story: Reed Landberg at landberg@bloomberg.net


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