FIT pre-accreditation workshop discusses options for changes

This morning, DECC held a workshop on pre-accreditation for the Feed-in Tariff, in preparation for next year’s comprehensive review. I attended to represent ADBA, joined by REA and four representatives from our members. The idea behind the workshop was to discuss the issues faced by different Feed-in Tariff technologies, and identify priorities for changes. If we can agree changes between the technology groups, they will be much easier for DECC to include in the 2015 consultation.

A discussion document from DECC is available here. Clearly this was an early-stage meeting and there is plenty of time to feed in views and opinions.

Unsurprisingly, all technology groups have issues with the operation of the pre-accreditation mechanism. Priorities for change were identified as follows:

• De-linking pre-accreditation from degression

This is a clear desire across the technologies, but there is a significant question about whether DECC would be willing to pursue this given that it would reduce their budgetary control. If they cannot completely remove the link, another option could be to partially break it, for example by creating a milestone before which a pre-accredited project is not counted towards degression.

• Adjusting pre-accreditation numbers to take account of attrition

This policy change would take into account the fact that not all pre-accredited sites are likely to reach full accreditation. This could be based on an assumed attrition rate (e.g. take the number of pre-accreditations and reduce by 20% to compare to the degression trigger), or the ‘milestone’ option as above. Data in 2015 on the proportion of 2013 pre-accreditations which reached full accreditation in 2014 will clearly be instructive.

• Extending the pre-accreditation window

All technologies are keen for an extension, to allow for delays in development and reduce pressures on the G59 process. For AD, two years rather than 12 months has been proposed by some members. We would be keen for views on this.

• Starting the pre-accreditation window at the point of approval, not application

This was also regarded as a helpful option, but less so than simply extending the window because of the potential complications, e.g. if a developer had been asked for clarifications by Ofgem and did not respond in good time. However, we would be keen for opinions on this.

Other options discussed but ultimately considered low priority or unhelpful were:

• Tightening pre-accreditation requirements

We discussed using financial close as an additional requirement. Although this could prove helpful in reducing the chance of speculative applications contributing towards degression, it was felt that options above could better reduce such impacts. Tightening the criteria could also add complexity both for developers and Ofgem, increasing delays, and could reduce the value of pre-accreditation by pushing it too late in the process.

• Removing pre-accreditation completely

Very small scale wind considered this may be helpful, but the general consensus was that pre-accreditation is regarded as too valuable for funders and developers to remove.

• Making no changes to pre-accreditation

Unsurprisingly, this was not popular with any of the technology representatives.

We were also asked to consider whether our priorities would change if budgetary constraints meant that removing the link between pre-accreditation and degression was impossible. We said that this made options such as taking account of attrition in setting degression (and consolidating the trigger bands across all scales of AD) even more important.

Finally, we were asked to consider the new State Aid Guidance, and whether restricting the Feed-in Tariff scheme only to plants below 1MW would change our priorities. (Note that DECC do not expect to have to do this). We noted the issues this would cause in general, but believe the same priorities for changing the scheme would apply.

Please do let me know if you have any views on the issues discussed above. We will of course circulate more information as we have it.