Farm Diversification

The Feed in Tariff (FiT) was introduced on the 1st April 2010 and is a scheme to incentivise the installation of small scale, low carbon electricity generation. The FiTs is designed to encourage deployment by organisations, businesses, communities and individuals who are not traditionally engaged in the electricity market.

This scheme sits alongside the Renewables Obligation (RO) which is available to support larger scale renewable energy generation. 
The FiT provides a good diversification opportunity to farmers as long as the renewable technology selected is appropriate to the resources available on farm and to the setting.

Review of the Feed in Tariff Scheme

Following the FIT scheme introduction, a review the uptake of the scheme and all the tariffs took place at the end of 2011. The review was divided into two parts

• Phase 2A: PV
• Phase 2B: All other technologies

The PV review was fast-tracked given that there was a much bigger uptake of PV than was expected. In fact taking into consideration the number of solar PV installations in the pipeline the number of installations in the first 21 months was five times the predicted number and eight times the predicted installed capacity.

All figures quoted below are based on the latest tariffs (April 2012).

How the scheme works

If you are eligible to receive the FiT then you may be able to benefit in 3 ways:

• Generation tariff: This is a set rate paid by the energy supplier for each unit (kWh) of electricity you generate. The generation tariff varies depending on which technology is installed and at what scale. This rate is index-linked but will reduce each year for new entrants (certain technology scales only) to the scheme (except for the first 2 years). Once you join you will continue on the same tariff for a set time period which varies depending on the technology.  See below for tariff rates.
• Export tariff: You will receive a further 3.2 p/kWh from your energy supplier for each unit you export back to the electricity grid, when your onsite generation exceeds your onsite usage. The export rate is the same for all technologies. Generators also have the option to forego the 3.2 p/kWh export tariff and make their own deal to sell energy to an energy company.
• Energy bill savings:  You will also make savings on your electricity bills, because generating electricity to power your appliances means you do not have to buy as much electricity from your energy supplier. The amount you save will vary depending how much of the electricity you use on site and the price you pay for power.

Eligibility

The small scale (less than 50 MW), low-carbon technologies that are eligible for FiTs include:

• Wind (building mounted or free standing)
• Solar photovoltaic’s (roof mounted or stand alone)
• Hydro
• Anaerobic digestion
• Domestic scale microCHP (with a capacity of 2 kW or less) (This limited to a pilot at this stage, with a maximum number of installations of 30,000 and a review after 12,000)

In order to be eligible for FiTs payments, the technology and installation must be approved through one of two routes:

Capacity of 50 kW or less (excluding anaerobic digestion) 

Installations which have a capacity of 50 kW or less (excluding anaerobic digestion) are required to obtain the Microgeneration Certification Scheme (MCS) certification or equivalent. The MSC scheme is an independent, industry led certification body. It assesses installation companies and products against robust standards. Its purpose is to assure the quality, durability and energy generation of products. This means that the installations must be commissioned by a MCS-certified Installer using a MCS-Certified Product or be certified under an equivalent scheme. Such installations need to apply for accreditation by contacting their energy supplier with their MCS details (to participate in the scheme the energy supplier must be registered as a FiT Licensees – a list can be found here). More information on the MCS can be found here.

Capacity of over 50 kW and all anaerobic digestion installations

Any systems over 50 kW and all anaerobic digestion installations must apply directly through the ROO-FIT process via Ofgem’s Renewable & CHP Register. Guidance on the ROO-FIT process is available on Ofgem’s website. Upon gaining the ROO-FIT accreditation, generators are required to contact their energy supplier a FiT Licensee with their ROO-FIT details (to participate in the scheme the energy supplier must be registered as a FiT Licensee).

Tariff Rates

There are two different tariffs – one for generation and one for export of electricity to the national grid: 
Generation Tariffs
The generation tariff varies depending on:

• The technology 
• Capacity
• The year of installation.

PV
The number of PV installations has been closely scrutinised due to capacity installed vastly exceeding predictions. For this reason a sliding scale tariff has been proposed which will be reduced as PV installation numbers increase. In addition, new FITs applications for solar PV will need to demonstrate that the building to which the solar PV installation is attached or wired to provide electricity has an Energy Performance Certificate rating of Level D or above.

The table below show the rates as they stand however given the constantly changing FIT criteria please ensure that you refer to DECCs FITs webpage.

Scale	Tariff level for 2012	Tariff Lifetime
≤ 4 kW (new build)	Higher rate 21.0 p/unit Middle rate 16.8 p/unit Lower rate 9.0 p/unit	25 years
≤ 4 kW (retrofit)	Higher rate 21.0 p/unit Middle rate 16.8 p/unit Lower rate 9.0 p/unit	25 years
> 4 – 10 kW	Higher rate 16.8 p/unit Middle rate 13.4 p/unit Lower rate 9.0 p/unit	25 years
> 10 -100 kW	Higher rate 15.2 p/unit Middle rate 12.2 p/unit Lower rate 9.0 p/unit	25 years
> 100 kW – 250 kW	Higher rate 12.9 p/unit Middle rate 10.3 p/unit Lower rate 9.0 p/unit	25 years
> 250 kW	8.9 p/unit	25 years
Stand alone system	8.9 p/unit	25 years

Another change that was brought about by the consultation is different rates for ‘multi installations’. This is aimed at developers that are already receiving FITs for 25 or more other solar PV installations.

Other technologies

Whilst the uptake of other technologies has not been as rapid as with solar PV, a complete review was carried out and the consultation document issued in February 2012. This consultation will close on the 26th of April 2012. The tables below show the rates as proposed however given that these are under consultation please refer to DECCs FITs webpage. for updated information. The proposed introduction date for the consultation tariffs is the 12th of October, 2012.

 

Technology	Scale	Tariff level for new installations in period (p/kWh) (NB tariffs will be index-linked annually)		Tariff lifetime (years)
		01/04/2012 – 12/10/2012	Proposed changes in Tariffs 12/10/2012-01/04/2013
Anaerobic digestion	≤ 250kW	14.7	14.7	20
Anaerobic digestion	>250kW – 500 kW	13.7	13.7	20
Anaerobic digestion	>500kW - 5MW	9.9	9.0	20
Hydro	≤ 15 kW	22.0	21.0	20
Hydro	>15 – 100 kW	19.7	19.7	20
Hydro	> 100kW – 2 MW	12.1	12.1	20
Hydro	> 2MW – 5MW	4.9	4.5	20
Micro CHP	≤ 2 kW	11	12.5	10
Wind	≤ 1.5 kW	35.9	21.0	20
Wind	> 1.5 – 15 kW	28.1	21.0	20
Wind	> 15 – 100 kW	25.4	21.0	20
Wind	> 100 – 500 kW	20.7	17.5	20
Wind	> 500kW – 1.5 MW	10.4	9.5	20
Wind	> 1.5 MW – 5MW	4.9	4.5	20

In addition the consultation document proposes that as of April 2014, a degression of 5% is applied to all tariffs.  This would apply to new entrants only. A caveat has been included that states if cumulative installed capacity hits a certain ceiling before 2014 then the degression comes into force before.

For further information on degression rates and cumulative capacity totals please refer to the Phase 2B: Tariffs for non PV technologies and scheme administration issues consultation document (DECC website)

Export Tariffs

The tariff has been set by DECC at 3.2 p/kWh and is uniform across the scheme. Generators also have the option to forego the 3.2 p/kWh export tariff and make their own deal to sell energy to an energy company.

How to Apply

The Energy Saving Trust should be the initial destination for anyone wanting to find information about eligibility for the Feed-in Tariff and how they can join the scheme. The Energy Saving Trust can be contacted on 0800 512 012. Businesses looking to participate should contact the Carbon Trust on 0800 085 2005.

Further Information

The Phase 2B review consultation period is due to close at the end of April 2012.  Further information and a response to this consultation will be uploaded to http://www.decc.gov.uk/

Useful Links

Energy Saving Trust: www.energysavingtrust.org.uk
Carbon Trust:  www.carbontrust.co.uk
Ofgem:  www.ofgem.gov.uk
Department of Energy and Climate Change: www.decc.gov.uk