Businesses braced for cuts to small scale generation and export rates


DSC01651-471x353Government has proposed steep cuts to small scale renewable energy subsidies. The department of energy and climate change (Decc) clarified its intentions in a consultation published today and could yet propose further cuts to the rates paid to firms which export power to the grid.

Decc plans to streamline subsidy bands for each qualifying technology and reduce the amount paid for each kilowatt hour of generation. While the department does not at this stage propose changes to the export tariff, the consultation points out the issues created at a local level by high concentrations of distributed generation. It also noted uncertainties between the rates paid to exporting generators and the wholesale power price.

Export tariffs

The department is mulling whether to lower the export tariff or to implement a dynamic tariff. However, that would require wholesale half hourly metering and settlement.

While that decision is yet to be made, the government set out aggressive cuts and digression rates for small scale renewable subsidies under the feed-in tariff (FiT) scheme. The smallest scale solar PV rate cuts are the deepest.

Solar PV

Under the proposals, commercial and rooftop PV schemes such as those deployed by UK businesses will also become less generous as of January 2016. For example, installations up to 50kW would receive 3.69p/kWh as opposed to the current rate of 11.30p/kWh. A reduction of some 67%.

The rates for larger PV installations, between 1MW up to the 5MW limit under the FiT, would be cut more dramatically, from the current rate of 5.94p/kWh to 1.03p/kWh.

The administration is also paving a path to end subsidies for new scheme entrants. It stated that small scale solar PV is the closest of all the renewable technologies is closest to becoming commercially viable without support.

Wind and hydro

Proposed subsidy cuts for small scale wind are less drastic. Sub 50kW schemes will see rates decrease 37% to 8.61p/kWh. However, support for new larger installations above 1.5MW could be scrapped entirely from 2016.

Small scale hydro developers will see less steep cuts. Schemes within the 100kW to 250kW range will see support rates fall by 14%.

See the full consultation here.

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