Govt. cuts feed-in tariffs for AD-power and CHP plants

Barkip biomass AD-power plant in Renfrewshire.
Barkip biomass AD-power plant in Renfrewshire.

The UK government has published an amendment to the Feed in Tariff regulations, in the form of The Feed-in Tariffs (Amendment) Order 2017. This follows on from an OFGEM consultation published in May 2016.

The amendment affects Anaerobic Digestion and micro Combined Heat and Power installations only, and operators of new installations will need to be aware of the significant changes being brought into effect.

In brief, Anaerobic Digestion will see a drop in FiT rates across all generation ranges, while the new sustainability criteria and feedstock restrictions could directly impact the revenue of some installations.

Micro Combined Heat and Power installations, on the other hand, have no drop in FiT rates, but are brought within the FiT deployment cap regime introduced in early 2016.

The key changes are as follows:-

Anaerobic Digestion

  • New tariff rates for Anaerobic Digestion facilities, taking effect from 1 April 2017;
    • The new tariff rates will apply to all new schemes from that date, with the exception of schemes where the application for ROO-FIT pre-accreditation was received by Ofgem before 1 April 2017 and qualified for a quarterly cap before 1 April 2017;
    • The new rates are shown below. This includes RPI, but does not include degression:-

 

Generation Tariffs p/kWh

(2017 prices)

 

Previous Tariffs Apr 2017

 

Jul 2017

 

Oct

2017

 

Jan

2018

 

Apr

2018

 

Jul

2018

 

Oct

2018

 

Jan

2019

 

AD 0 – 250 kW

 

8.21 6.93 6.88 6.83 6.78 6.73 6.68 6.63 6.58
250 – 500 kW

 

7.58 6.56 6.51 6.47 6.43 6.38 6.34 6.3 6.25
500 – 5000 kW

 

7.81 2.49 2.45 2.42 2.38 2.35 2.31 2.27 2.24

 

  • Feedstock sustainability criteria (in the form of a greenhouse gas emissions threshold) and feedstock restrictions take effect from 1 May 2017. The feedstock restrictions on land have been aligned with those under the Renewables Obligation and the Renewal Heat Incentive;
    • Feedstock where >50% of the total biogas yield is not derived from waste or residue will have FiT payments limited;
    • Facilities will need to report quarterly on compliance and provide an annual independent audit report;
    • The sustainability criteria and feedstock restrictions will not apply to feedstock entirely composed of waste;
    • If the application for ROO-FIT pre-accreditation is received by Ofgem before 1 May 2017 then regardless of whether the facility qualifies for the quarterly cap before or after that date the sustainability criteria and feedstock restrictions will not apply. The sustainability criteria and feedstock restrictions will apply to all other new Anaerobic Digestion facilities;

 

  • Reduce, withhold or recoup FiT payments. Ofgem now has the power to take any of these actions where the facility has received a FiT payment it is not entitled to by virtue of the sustainability criteria and feedstock restrictions.
  • The operator will receive a notice from Ofgem with reasons, and will have an opportunity to object to Ofgem. The making of an objection will not automatically stop the reduction, withholding or recouping taking place, however;

 

Micro Combined Heat and Power

  • The UK Government has decided not to change tariff rates, but mCHP will have a 20MW deployment cap comprising 6 monthly 5MW caps plus a 10% annual degression in FiT rates, all taking effect from 1 April 2017;
    • The deployment cap will operate in the same way as the existing deployment cap scheme operated in relation to onshore wind, solar PV, hydro and others;
    • For mCHP the changes will only apply to schemes where the MCS certificate is issued on or after 1 April 2017;
David Maguire
David McGuire

Operators affected by these changes who wish further information on the impact of the new regulations should contact David McGuire, Director at the legal services firm www.MacRoberts.com

 

 

 

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