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The Government has today launched a consultation on the removal of pre-accreditation from the Feed-in Tariff (FIT).
Addressing the consultation, the Department of Energy & Climate Change (DECC) explained that it was seeking to take:
Action to limit the risk to bill payers of a deployment surge under the Feed-in Tariff through the removal of pre-accreditation. We are seeking a broad range of input from industry and from consumers. DECC will carry out a full review of the Feed-in Tariff scheme in 2015 and will consult on a full package of cost control measures in due course.
The DECC consultation document itself outlines the likely impact of such a decision:
By removing the possibility for projects to pre-accredit, there is less certainty on offer to developers. When they begin to develop a project, they will not be certain as to what tariff they will receive, as there may be tariff degressions between then and the point of accreditation.
ADBA’s Chief Executive, Charlotte Morton, commented:
FIT pre accreditation is vital for the ongoing success of the anaerobic digestion sector. Even smaller AD projects are relatively complex, and take over a year to develop – pre accreditation helps to make the development risk acceptable to funders.
Tariffs for AD are already being reduced, and deployment is falling as a result – so this change is unnecessary from a cost control perspective. The industry's long development times mean these changes would move the goalposts after the game has kicked off for projects in progress, which will have a severe impact on investor confidence.
With support, AD can deliver cost effective greenhouse gas savings – potentially as high as 4% across the economy as a whole – and grow a UK supply chain which helps deliver economic productivity and exports. These proposals put that potential at risk, preventing the development of the very technologies that will lower consumer bills in the long-term.
How will the government be able to maintain rhetoric on meaningful climate change commitments at December’s Paris conference, while hitting our green economy at home?
Today’s news emerges mere weeks after the Chancellor of the Exchequer, Rt Hon George Osborne MP, announced the Summer Budget 2015, the removal of the Climate Change Levy exemption for renewables. This measure alone will reduce revenue by around £5 per MWh, which for the 2.2TWh of electricity generated by the AD industry, will cost industry around £11 million per year, impacting investor and operator confidence.