Making the Feed-in Tariffs work for you
The Feed-in Tariff scheme
(FITs) was introduced in the UK on 1st April 2010 to help the UK
achieve its renewable energy target by 2020.
The FITs scheme guarantees
a minimum payment for all electricity generated through a number of
renewable energy systems such as solar and wind, as well as a
separate payment for the electricity exported to the grid.
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News flash:
Government appeal on Feed- in -
Tariffs fails read more
Government Review of FITs
The Department of Energy and
Climate Change (DECC) has announced it is bringing forward its
review of the scheme which will be completed by the end of 2011. It
was originally scheduled for April 2012.
The review will fast track
consideration of solar projects over 50kW with a view to making any
resulting changes to tariffs as soon as practical.
Tariffs for smaller schemes are
likely to remain unchanged until April 2012 unless the review
reveals a need for greater urgency. The Government has stated it
will not act retrospectively and any tariff changes implemented as
a result of the review will only affect new entrants into the
scheme.
Feed-in Tariff
FITs apply to small scale low
carbon electricity generation up to five megawatts. There are
two types of tariff:
1. Generation tariff – a set
rate paid by the energy supplier for each unit (or kWh) of
electricity generated. The rate will change each year for new
entrants to the scheme except for the first two years. The
generation tariff rate is currently 43.6p/kWh for solar panels and
will be fixed for 25 years subject to indexation increases. Other
technologies, such as wind, generate a smaller tariff.
2. Export tariff – an
additional guaranteed minimum payment for every kWh exported to the
grid. The rate is currently 3p/kWh and is the same for all
technologies.
FIT - as a landowner is it better to be in or out?
There are two options available to
a landowner:
1. The landowner may appoint
a microgeneration certification scheme (MCS) accredited contractor
to install and then obtain accreditation of the installation. The
benefit to the landowner under this option is that the
landowner retains the FIT and control of the installation. The
landowner, also however, assumes responsibility for the
installation.
2. The landowner may lease
roof space or land to a contractor who will install the system,
obtain MCS accreditation and receive the benefit of the FIT. The
benefit to the landowner is that he avoids any expenditure and
usually obtains electricity generated for free or at a reduced
price. This however, may result in reduced control over the roof
and/or land affected.
Procurement Issues
Depending on the size of the
project, it may be necessary for public bodies to comply with
European procurement rules which. Following the recent withdrawal
of the Welsh Assembly framework procurement, this may require
initiation of a fresh OJEU procurement exercise. Careful
development of a strategy and design for the procurement will be
essential to minimise the risk that the installations cannot be
completed prior to the FITs rates being reviewed.
In any event, different panels and
inverters will have different capacities, efficiencies, degradation
rates and reliability. These characteristics, together with
orientation, angle and average light condition, in turn impact on
the revenues which can be generated through the FITs. It is vitally
important, therefore, that during procurement, a clear
assessment of the overall net value of each system, based on the
relevant available locations, is undertaken.
Planning Issues
Installation of solar panels on
commercial property falls outside of the domestic "permitted
development" regime. A planning application must
therefore be made to the local planning authority.
Stand alone solar panels (i.e.
solar farms) also fall outside of the "permitted development"
regime and will require planning permission.
The installation of solar panels
constitute "permitted development" for which planning permission is
not required on premises other than general industrial, provided
that:
- the solar panels do not extend
beyond the limits of the roof;
- they do not project more than
200mm above the roof plane;
- if located within a world heritage
site or a conservation area they are not visible from any highway
that bounds the curtilage of the property; and
- they are not sited within the
curtilage of a listed building or a site designated as a scheduled
monument.
Other Legal Issues
Depending upon the option chosen by
a landlord, there will be further legal issues to consider. These
include maintenance of the installations, whole life costing,
insurance, title issues, third party consents, risks in respect of
optimisation of orientation and design of the system to maximise
revenue generation and risks of sufficiency of light over the 25
year period.
If you are considering installing a
system and want to take advantage of the FITs, it is important to
seek legal advice at the outset. It is crucial to speak to someone
who is experienced in solar power schemes to ensure you make an
informed and well balanced business and financial decision.
About Hugh James Energy Team
Hugh James' team of energy
specialists includes experts in procurement, property and
construction, who offer practical and cost effective advice based
on their understanding of the energy sector. Working closely
with their network of energy consultants, they offer advice from
feasibility through to project completion and are currently
advising on solar projects across Wales, including solar farms.
For more information or for a
no-obligation legal and technical consultation, please contact Ioan
Prydderch on 029 2039 1127 (email ioan.prydderch@hughjames.com)
or Shaun Jamieson on 029 2039 1053 (email shaun.jamieson@hughjames.com).