Solar Power, Feed-In Tariffs (FITS) and Grants
The FITS Scheme provides a fixed payment called the generation (the feed-in) tariff. It also pays for any electricity exported to the National Grid (the export tariff). It went live on 1 April 2010. Under the FITS Scheme, individual organisations and businesses in the United Kingdom are able to claim back cash for electricity they produce from eligible renewable and low carbons sources except where the sources have been paid for using public subsidy which includes funding from the Homes and Communities Agency (HCA).
Eligibility for FITS is a matter for Ofgem (the Office of the Gas and Electricity Market) who administer the Scheme in accordance with the Energy Act 2008. Eligibility for FITS is defined through The Feed-in Tariffs (specified maximum capacity and functions) Order 2010 and the associated modifications to the Standard Conditions of Electricity Supply Licence made by the Secretary of State under Section 42 (3) of the Energy Act 2008.
Ofgem’s key role is to maintain the Central FITS Register which is a database of accredited installations. Ofgem is also responsible for ensuring suppliers comply with the FITS Scheme requirements.
The Department of Energy and Climate Change (DECC) stated recently that the FITS Scheme is intended to replace not supplement public grant schemes as the principle means of incentivising small scale low carbon electricity generation. Because of this and to ensure value for money for consumers and compliance with EU Law on State Aid, it is generally not possible for a generator to benefit from both FITS and a grant from a public body.
Ofgem therefore must not accredit an eligible installation as an accredited FIT installation unless the FIT generator has given notice that no grant from public funds has been made in respect of any of the costs of purchasing or installing the equipment or where any such grant has been made, that the grant has been repaid to the authority which made it. In practical terms Registered Providers (RP’s) applying for FITS, need to confirm that no conflict of grants will arise and Ofgem is responsible for ensuring compliance. Some energy companies have taken a more cautious attitude to applications than others.Conflict should only arise when a grant has been received for the specific renewable component of the specific scheme.
The HCA have recently stated that whilst their funding requirements expect RP`s to achieve Level 3 of the Code for Sustainable Homes on their schemes, it is very possible to achieve this without the use of micro-renewables. They have said that their requirements do not prevent RP`s from demonstrating that they have met the HCA standards through fabric efficiency and have not used HCA grant when installing micro-generation equipment. This statement appears to be backed by the Department of Communities and Local Government and the DECC .
However, last year the Government committed in its spending review to save 10% of the cost of FITS in 2014 - 2015 through a review to start in 2012 or earlier if uptake of FITS exceeded expectations. This must have occurred because a comprehensive review of FITS was launched on 7 February 2011 to assess all aspects of the scheme including tariff levels , eligibility of technologies and administration. The review is due to be completed by the end of this year unless greater urgency is required. The review is to include fast track consideration of large scale projects (i.e .those with capacity over 50kw), with a view to making changes in tariffs as soon as possible. They appears to be concerned that large scale solar farms could take a disproportionate amount of available funding intended to help homes, communities and small business to generate their own energy.
According to a BBC report made on 18 March 2011, the Government is now proposing to cut up to 70% from FITS payments for large scale solar energy production to be implemented on 1 August 2011. Whilst the Government`s proposal is still subject to consultation, it appears that FITS payments for any solar installations with capacity over 50kw will be subject to some tariff reduction but the full reduction will apply to installations with capacity of 250Kw to 5Mw ( which is said to be the size of a standard farm based scheme).
Queries concerning domestic installations and how to appoint a supplier for the FITS or what the level of tariff might be, should be directed to the Energy Saving Trust on 0800 512 012. If the query concerns commercial installations, calls should be made to the Carbon Trust on 0800 085 2005.