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UK - Government commits to feed-in tariffs for 2010
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Pangea on 10/12/2009 22:00:00
 
Feed-in tariffs would mean the big energy suppliers pay householders, schools,
hospitals and community projects if they generate their own renewable
electricity, although any costs are likely to be passed on via consumer
electricity bills.
Last night saw the government confirming the introduction of the tariffs,
perhaps within 16 months, as the Energy Bill encountered the final stage of its
passage through Parliament.
The debate saw the Conservatives stating that if the government did not bring in
feed-in tariffs before a general election in 2010, and subsequently lost the
election, a Tory government would bring in the tariffs "with greater urgency and
dedication".
Energy minister Mike O'Brien argued that getting the detail of the feed-in
tariffs system correct was as important as getting them introduced quickly.
"Moving too fast and getting it wrong will carry a price, and that price will be
paid by consumers," he warned.
Nevertheless, the minister attempted to please MPs by declaring: "We are
committed to introducing a feed-in tariff scheme for small-scale electricity in
2010. Our ideal target is for the scheme to go live in April 2010, so that it
can be aligned with the financial year of the renewables obligation."
Prompted by the Conservative shadow energy minister Charles Hendry, Mr O'Brien
said if the government misses the April 2010 target, it would introduce the
feed-in tariffs as soon as possible afterwards, it would not wait until the next
financial year.
During the debate, Mr Hendry said of the Conservatives' view on feed-in tariffs:
"There should be no doubt in the Government's mind that, if they do not deliver
the feed-in tariff by the last date for a general election in 2010, we will make
it a key plank of our election policies."
The debate on the Energy Bill was the final stage of the Bill before its
expected Royal Assent next week, ostensibly for MPs to give their seal of
approval to changes made to the Bill by the House of Lords.
5MW CAP
However, the debate saw the government adding a small number of amendments -
mainly minor technical corrections to the text, but also a move to increase the
limit of the feed-in tariff for electricity from 3MW to 5MW.
The 5MW cap would be on a generation project's stated capacity, the minister
said, explaining that there would be no upper limit on how many kWh of energy
was produced by a project each year.
Mr O'Brien explained that the move would give the government greater freedom to
set feed-in tariffs at the right level to support household and community power
generation projects. "We will, of course, consult on the tariffs next year. As
part of that process, we will undertake further analysis to determine the limit
at which FITs would be set below the 5 MW cap," he said.
The 5MW threshold had the backing of the opposition parties, who accepted that
the level was an upper limit for the purposes of the primary legislation only,
not the final cap on a feed-in tariff scheme ready to roll out.
However, Labour backbencher Alan Simpson lambasted energy industry lobby groups,
including the Association of Electricity Producers and the British Wind Energy
Association, for demanding the government set a much lower cap on the feed-in
tariff to preserve "substantial rewards that go only to our large energy
companies" under the Renewables Obligation.
Mr Simpson, credited as one of the key figures in persuading the government to
adopt feed-in tariffs for small-scale renewable energy projects, said of
suggested 50kW or 500kW caps: "Such demands would preclude the opportunity to
develop genuine, transformational renewable energy systems on a community, town
or city scale."
"GUARANTEED PAYMENT"
MPs had the chance last night to probe the government on some of the details of
the feed-in tariffs, with Mr Hendry putting the concern to ministers that the
vague nature of the Energy Bill amendment still left the government the option
of bringing in a scheme other than a feed-in tariff. The shadow minister pressed
his opponent across the despatch box for more of a guarantee that a feed-in
tariff would definitely be brought in.
Mr O'Brien attempted to reassure doubters, insisting no form of "super-ROCs"
system would be brought in against MPs' wishes.
"Generators will receive a guaranteed payment for electricity over a certain
period of time," he insisted. "Newly developed plants only have the expectation
that the level of payments for a technology will decrease with time as that
technology matures."
The energy and climate change minister added: "Feed-in tariffs will be flexible
to allow different levels of payment for different technologies - as well as for
different scales of technology."
Emphasising the government's change of mind over previous defences of the
Renewables Obligation system in the face of pressure to bring in feed-in
tariffs, the minister even went as far as saying that recent government research
suggested the RO may not be suitable for smaller projects.
He said the Department had looked into the relative complexity of the RO system,
and concluded that "although some small-scale projects have operated via the RO,
the results are patchy".
However, the minister added: "Although there is a lot of praise for the
introduction of feed-in tariffs, the renewables obligation will continue to be a
primary means by which we ensure that the 2020 target is hit."
The minister suggested there would be an announcement soon giving guidance to
those renewable electricity projects below 5MW in scale that may be torn between
seeking RO support or waiting for feed-in tariffs to kick in.
"Our aim in this announcement, however, is to minimise the risk of projects
being tempted to wait and see before committing to either the RO or FITs," he
said. "2020 is only 11 years away - delay now is undesirable."
CHP
As well as technologies like wind and solar power, biomass-fuelled systems and
small marine or hydropower schemes, the feed-in tariffs will also be available
for micro-CHP systems using fossil fuels. This is because decentralised combined
heat and power (CHP) systems that generate electricity and heat for a property
are so much more efficient than using power from a central power station.
Under the government's plan, only CHP systems below 50kW in capacity will be
eligible for feed-in tariffs.
MPs led by Mr Hendry attempted to get the government to scrap this 50kW limit,
arguing that larger CHP systems would bring energy efficiency benefits in
district heating schemes even using fossil fuels.
But Mr O'Brien said the feed-in tariffs were designed to promote renewable
energy, that large CHP plants already had financial incentive mechanisms
available and would also be dealt with by next year's Heat and Energy Efficiency
Strategy. The minister won the subsequent vote on the amendment with a majority
of 46.
Later in the debate, there was also confirmation of the mandatory introduction
of smart meters for households - systems that can tell consumers exactly how
much energy they are using.
Mr O'Brien stated that after consulting the building industry, new buildings
will be required to have smart meters "as soon as possible". Remaining
households would have smart meters fitted with a 10-year national roll-out
scheme expected to start in two years' time.