Consultation on the possible removal of pre-accreditation for feed-in-tariffs (FiT) has caused concern about future investment in anaerobic digestion (AD) schemes.
The current system allow investors to back projects with the certainty that subsidies will be set at a specific rate ahead of construction.
But a Department of Energy & Climate Change (DECC) consultation on removing this pre-accreditation has prompted fears that knowing the level of subsidy only when a project is completed will hit investment.
Currently feed-in tariffs (FiTs) are subject to degression, meaning they reduce in value once a certain proportion has been allocated to projects. They are also based on the current level of commissioning and interest in future projects.
MRW understands that the next FiT degression will be in October, with a possible 10% cut in subsidy. DECC has said the Government will also consult on further cost control measures as part of a wider FiT review later in the summer.
Launching the consultation, DECC said it was taking action “to limit the risk to bill payers of a deployment surge under the FiT [scheme] through the removal of pre-accreditation”.
DECC itself identifies the potential uncertainty: “By removing the possibility for projects to pre-accredit, there is less certainty on offer to developers. When they begin to develop a project, they will not be certain as to what tariff they will receive, as there may be tariff degressions between then and the point of accreditation.”
A written statement in Parliament said: “The FiT scheme was introduced in April 2010 to support sub-5MW solar, onshore wind, anaerobic digestion and hydro projects. Pre-accreditation was introduced in order to allow installations above 50kW to lock in their tariff level. Now that the sector has demonstrated its ability to deploy at scale, the Government believes that it is appropriate to look to transfer that risk back to industry.”
Charlotte Morton, chief executive of the Anaerobic Digestion and Bioresources Association (ADBA), said: “FiT pre-accreditation is vital for the ongoing success of the AD sector.
“Tariffs for AD are already being reduced and deployment is falling as a result, so this change is unnecessary from a cost control perspective.
“Taken together, the £11m cut announced in the summer Budget, uncertainty over the future of the Renewable Heat Incentive beyond next year, the FIT pre-accreditation review and ongoing degressions are having a hugely negative impact on investor confidence.
“This could have calamitous results for the future development of AD, the wider green economy and, most significantly, the UK’s ability to meet critical climate change targets.”
ADBA recently said that although sector expansion has been slowing since 2014, which saw more than 100 plants pass the commissioning stage, it still expected an additional 60 to 100 new projects in 2015.