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Feed In Tariff

October 2010:

The Government Financial Review has not had any significant impact upon the Feed In Tariff support mechanism, with all wind energy projects up to 5MW applicable for support under the scheme.

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The Feed In Tariff support mechanism for renewable electricity production came into force on 1 April 2010, and has been designed to largely replace the older Renewable Order Certificates scheme, with greater financial benefits for smaller projects.

The Feed In Tariff scheme (FiT) has two components; generation and export, with a total contract price for 500kW - 1.5MW wind turbines of £94 per MWh for generation + £30 per MWh for export; £124/MWh, or 12.4 pence per kWh.  This is index linked for 20 years, however the generator can choose to exclude export - a separate power purchase generation contract can be negotiated with your chosen power company.  The price being offered is therefore similar to the best overall rate that was available during the high oil price spike of 2008.

The FiT has a banded structure, with the largest level of support given to the smallest scale, and note that the level of benefit changes with the different types of renewable energy technology.  For larger projects the generator can choose to either use FiT or the older ROC scheme, and there are pros and cons for both mechanisms.  Feed in Tariff is stable and bank-friendly, and if your project has a high level of debt, then you may find that FiT is the better scheme. If however you have largely cleared the debt on the project, then it may be more appropriate to consider the ROCs scheme, as this allows a more flexible carbon trading mechanism. Please get in touch if you would like a fully costed comparison, or if you want estimates of the potential revenue that can be provided by renewable electricity production from your site.

The following table shows the generation tariffs for the various technologies, and note that 3p/kWh should be added for export unless a separate power purchase contract has been negotiated

For wind energy projects in the 1.5MW to 5MW band the figures are quite similar to the older ROCs scheme; £74/MWh including export.  For a three or more turbine development it is probably going to be better to stick with the existing PPA/ROCs/LECs structure, as this will give a better revenue once debt has been repaid. Note that the FiT scheme has transitional arrangements for projects that were accreddited after July 09, older projects have to stick with the original ROC system, and new projects have to choose between FIT or ROC at the time of accreditation.  The Renewable Energy Association has issued a press release on this scheme. 

 

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