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Government Announces Proposed Changes To Feed In Tariff Scheme

Friday 10th of February 2012

Following several months of uncertainty and a dramatic, wholesale change to support for solar photovoltaic projects, the Government have provided details of their future commitment to small and medium scale renewable energy.

The Feed-in Tariff (FIT) scheme was first introduced in April 2010 to kick start growth in small-scale renewable energy projects in the UK, across a range of technologies. This was achieved with spectacular success within the solar photovoltaic (PV) industry with over 144,500 PV installations, equating to 589MW of installed capacity, recorded within the first 2 years of the scheme. The success was however not witnessed uniformly across other technologies such as wind, hydro, anaerobic digestion (AD), and micro-CHP, which prompted the Government to react with cuts to the solar PV tariff levels at the end of last year. These cuts are due to come into effect on 3rd March 2012 after which time eligibility for FITs will be dependent on energy efficiency criteria.

On Thursday 9th February, the Government invited consultation responses to proposed changes in tariff levels for wind, hydro, AD and micro-CHP, which would come into effect in October 2012. These tariff alterations reflect recent changes in the cost and characteristics of the various technologies and although tariffs have generally been fixed at existing levels or reduced, they are set with an aim to provide target rates of return in the region of 5-8%. In addition, an upper tariff limit of 21p/kWh is proposed across all technologies to avoid the problem of disproportionate support.

Joel Turner, gfw-Renewables, considers that at these proposed levels, it is clear that the Government intends to continue its support of small-scale renewable energy and as a result, projects can continue to provide an excellent investment, both financially and environmentally.

 Joel is also pleased that the Government has, in order to further increase confidence in the FIT scheme and to avoid a re-run of the recent damaging solar PV cuts, produced a roadmap for future tariff reductions which extends to 2021. This will help to provide certainty to strengthen the small-scale renewable energy market and allow companies and developers to plan for future projects in advance.

The government’s proposals are now subject to consultation before confirmation in May 2012. gfw-Renewables are pleased to offer expert, independent advice to assist you with any renewable energy related issues.

The Government’s announcement can be viewed here.

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