Energy generation

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What does the end of the Feed-in Tariff mean for energy?

The Feed-in Tariff (FIT) launched in 2010 and closed on 31 March 2019. The aim of the scheme was to encourage the uptake of small scale renewable electrical generation and in turn kick start an industry in the UK.

Although there were times when government seemed to be acting against the industry, it has ultimately delivered an industry in the UK for domestic and commercial users to generate their own power.

As of December 2018 there are 837,722 FIT accredited installations (see graph below). Of these 828,146 are solar PV installation and of that the significant majority are domestic solar PV installations (that is, less than 4kW).

Although the FIT scheme was dominated by domestic solar PV schemes it was open to projects as large as 5,000kW. Just 6,858 installations have an installed capacity of over 50kW, which is a tiny fraction of the overall number of installations. However the total capacity of these larger schemes represents around one-third of the total capacity of all schemes combined.

These larger schemes have primarily benefitted the rural and farming community with wind turbines, hydro schemes, anaerobic digestion and solar PV all featuring heavily on the agenda of land managers over the past decade. The graph below shows the deployment of schemes with a capacity of over 50kW.

Naturally the question following the closure of the FIT scheme is ‘are there any opportunities left for small scale renewable generators?’ and happily the answer is, yes.

During the past decade capital costs for wind turbines and in particular solar PV, have fallen significantly, meaning that if the majority of the energy generated is used on site the investment is more than likely to be worthwhile.  

The main question in the absence of the FIT is how is the owner of a scheme paid? Inevitably not all the power generated on site will be used on site and some of it will be exported onto the grid. The FIT scheme provided a mechanism for payment of this power, but this route stopped with the schemes closure. The Government is working on a solution which it has called the 'Smart Export Guarantee'.

The Smart Export Guarantee will create value for exported power and is intended to provide a stepping stone ‘which can help unlock technological innovations like home energy storage and more efficient electric vehicle charging’, but we await a start date for the new scheme.

Or will we? The private sector is coming up with its own solution. Octopus and E.ON have both launched new tariffs which pay customers for excess power.  Through its ‘Outgoing Octopus’ tariff Octopus is reported to be offering a flat rate of 5.5p.kWh or a variable rate based on the whole sale spot market, while E.ON is offering a rate in line with the FIT’s export rate of 5.24p/kWh.

We shall have to wait and see whether these will hold up to the volatility of the wholesale market.  


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