Feed In Tarriffs (FIT), Renewable Heat Incentive (RHI) and CRC Energy Efficiancy Scheme

1. Feed in Tariffs (FiTs)

2. Renewable Heat Incentive (RHI)

3. CRC Energy Efficiency Scheme

Feed in Tariff (FiT)

Did you know that if you install small scale (less than 5MW), low carbon electricity generation to your home or business you will be eligible to be paid money back to you from your utility company.  You can receive money for firstly generating your electricity and secondly for any surplus energy you create which can be exported back to the grid (your utility provider).

The Department of Energy and Climate Change (DECC) has used powers in the Energy Act 2008 to introduce the Feed in Tariff (FiTs) system to incentivise small scale (less than 5MW), low carbon electricity generation

The FIT System is already proven and has been in place in many states such as Germany, Israel, the US, Spain and Austria for some time now and has been instrumental to the success and growth of the renewable energy industry in those countries. 

The FiT scheme went live in the UK on the 1st April 2010.  Due to the large uptake in Solar PV projects the government announced  Phase 1 of the comprehensive review on the 31st October 2011.  

 To control spending, they have proposed revised tariffs for most solar PV to bring the expected rate of return back to around 5%.  SOL2O are still estimating returns of aound 10%.  The governement are proposing;

• To reduce solar PV tariffs from 1st April 2012, with the lower tariffs applying to all new solar PV installations with an eligability date on or after 1th December 2011.  For domestic PV, this would mean a reduced tariff from 43.3p/kWh to 21.0p/kWh with similar cuts for larger installations.

• Strengthening the link between FITs and energy efficiency from April 2012, with properties that do not meet the minimum energy efficiency levels receiving FITs at a lower rate (9p/kW).

• Introducing a new, multi-installation tariff rate from April 2012 to reflect the lower costs for aggregated schemes e.g. rent-a-roof.

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Current FIT rates are below - To read more about the review and the proposed new rates please clieck here.

Notes:

•  "Retrofit" means installed on a building that it is already occupied.
• "New Build" means where installed on a building before fisrt occupation.
• "Stand-alone"means not attached to a building and not wired to provide electricity to an occupied building.

Proposed New Tarriffs for solar PV after the 31 October Feed In Tariff (FiT) Review

* Note that these are the current tariffs which, like all other current tariffs, will be adjusted in line with the Retail Price Index from 1st April 2012.

Under the proposed new tariffs, a well sited 2.6kW domestic PV installation costing around £6500 could result in FIT Payments (generation tariff and export tariff) of around £500p/a, and total FITs revenue of £730p/a (nominal undiscounted) once bill savings are taken into account.

This combined with an estimated bill saving of around £270p/a will result in a return of around 11.4%.  In a world of low interest rates, this remains a competitive investment opportunity for households.

Commercial installations are still an attractive investment.  A 10kW system will cost £23,500 and could result in FIT payments of around £1100p/a, combined with a bill saving of £1030 this will result in a return of around 10.6%

A 25kW system will also still result in a Return on Investment (ROI) of around 10.6%.

We urge those looking to install solar PV to act now to get the best rates for 25 years.  There are incentives to act sooner rather than later.

Please note that all calculations are based on a 30 degree south facing roof, with no shading, using SAP 2009 figures.  The figures are based on the new 31st October FIT Review.  Those looking to install will require a technical survey to ascertain exact costs.

Renewable Heat Incentive (RHI)

The CSR confirmed that the Renewable Heat Incentive (RHI) will go ahead in 2011. This scheme is designed to provide long term support for renewable heat technologies, from household solar thermal panels to industrial wood pellet boilers.

The RHI will represent over £850m of investment over the spending review period, driving a more-than-tenfold increase of renewable heat over the coming decade and shifting renewable heat from a fringe industry firmly into the mainstream.  Heat production is responsible for around half (49%) of the final energy demand consumed in the UK and roughly half of all UK’s carbon emissions. Taking action now to switch from fossil fuels to cleaner and more sustainable green sources of energy will reduce the impact that our heat requirements have on the environment and help ensure the UK has an energy supply that is safe, secure and reliable. 

First businesses and public sector organisations are expected to be the biggest beneficiaries of the plan in June 2011, though households will be able to take advantage of the full range of subsidies from October 2012.  Even those early renewable heat adopters can benefit from the tariffs because they will be paid for 20 years to the eligable technologies that have been installed since July 2009.

In the meantime, up to 25,000 installations from July 2011 will be supported by "RHI Premium Payment" to help people cover the purchase price of green heat systems.

CRC Energy Efficiency Scheme

The CRC is a mandatory energy efficiency scheme aimed at improving energy efficiency and cutting emissions in large public and private sector organisations. These organisations are responsible for around 10% of the UK’s emissions. 

The scheme features an annual performance league table that ranks participants on energy efficiency performance. Together with the reputational considerations, the scheme encourages organisations to develop energy management strategies that promote a better understanding of energy usage.  The scheme is designed to tackle CO₂ emissions not already covered by Climate Change Agreements (CCAs) and the EU Emissions Trading Scheme. 

Organisations are eligible for CRC if they (and their subsidiaries) have at least one half-hourly electricity meter (HHM) settled on the half-hourly market. Organisations that consumed more than 6,000 megawatt-hours (MWh) per year of half hourly metered electricity during 2008 qualify for full participation and need to register with the Environment Agency, who is the administrator for the scheme.  Organisations that do not meet the 6000MWh threshold will have to make an information disclosure of their half hourly electricity consumption during 2008, which they submit once per phase. Particpants, including supermarkets, water companies, banks, local authorities and all central Government Departments. Qualifying organisations will have to comply legally with the scheme or face financial and other penalties. 

DECC has developed the CRC policy in partnership with the Scottish Government, the Welsh Assembly Government and the Department of Environment Northern Ireland. 

Don’t wait.  Act now to get best rates

In the coming year upward pressure on prices of PV cells and other renewable and sustainable energy kit as China (who manufacture most of the PV cells used in the UK) introduces a FiT type scheme of their own and glass and steel prices increase if and when USA economy recovers.  If potential purchasers of renewable and sustainable energy systems covered by FiTs (including anaerobic digestion, hydro,  combined heat and power, PV and wind), wait until the last minute to get best rates for 20+ years (initial rate expires in April 2012) then there may be a skills and labour capacity gap and demand may out strip supply.  Thus there are real incentives to act sooner than later.

If you you would like to find out more about the Feed in Tariffs (FiTs), Renewable Heat Incentive (RHI) or the CRC Energy Efficiency Scheme, please contacts us on 0800 2800 0202, or click here to register with us.