The Feed-in Tariffs (FiTs) supports certain renewable energy technologies up to 5MW electricity generation capacity. The scheme provides a revenue benefit for power generation and gives a guaranteed minimum value for any power exported to the National Grid. The supported technologies are: anaerobic digestion Combine Heat and Power (CHP); hydroelectricity; solar photovoltaic; and wind power.
The FiT is split into a "generation tariff" and an "export tariff" both are paid to the owner of the generating plant by the electricity provider. Of course if used on site there is no need to purchase from the grid. A minimum export tariff of 3.1p/kWh has been set for 2011. The FiTs generation tariff depends on the renewable technology being used and the size of the installation, i.e. FiTs start at 4.7p/kWh for large scale wind, rising to 43.3p/kWh for small scale PV.
Example: 50kW Wind Turbine generating 230,000kWh/year; each kWh generated would yield 25.3p/kWh; any power used on site would offset grid power at say 10p/kWh; in reality it is unlikely that all of the generated power could be used on site, hence some would be exported at 3.1p/kWh; assuming a 50/50 split over a year the value would be £73,255.
Once a scheme has qualified the FiT is guaranteed for 20/25 years, and is indexed linked. To encourage more cost effective technology to be developed, for certain technologies the FiT will degress over time.
On 9th June 2011 the Government announced announced a significant reduction in the support for large scale Photovoltaic installations, this has affected any project with a capacity of greater than 50kW. There was also a small increase in support for anaerobic digestion.
The Renewable Heat Incentive (RHI) and not yet been formally launched, but any qualifying technologies installed after 15th July 2009 will be eligible for payments under this scheme. The scheme is initially focussed on commercial/industrial installations.
The supported technologies are: biomass boilers; energy from waste; ground and water source heat pumps; deep geothermal; solar thermal; biogas combustion for heating; biogas injection into the national grid; renewable combined heat and power.
The Renewable Obligation Order (ROO) provides Green certificates for eligible facilities - Renewable Obligation Certificates (ROC). Generators are required under the ROO to purchase a certain number of ROCs, hence creating the ROC market which is designed to gradually increase ROC value. FiTs do not apply to biomass CHP, and this scheme provides a revenue stream for such projects. The value of ROC’s is less certain than with FiTs, since the value is dictated by the ROC market.
For organisations that consume over 6000 MWh (electricity) on ½ hourly metering the Carbon Reduction Commitment Energy Efficiency Scheme (CRC ) comes into play. This scheme is broadly revenue neutral for the exchequer and starts in April 2010; CRC allowances are purchased on the basis of the CO2 emissions, currently £12/tonne of CO2; the revenue is recycled back to the participants in favour of the best performers. A site with 1MW of power usage would purchase approximately £84k of allowance per year. The onsite generation of renewable power would reduce the need to purchase CRC allowances (if not claiming FiTs), help to improve an organisations position in the published CRC league table, and increase the amount CRC revenue received. Once the scheme is established allowances are expected to be traded to promote energy efficiency in the most cost effective manner.
Climate Change Levy
Climate Change Levy (CCL) is chargeable on the industrial and commercial supply of taxable commodities for lighting, heating and power by consumers in many businesses including the retail sector. Onsite renewable generation isn’t liable for this levy, so provides some insulation against future increases. CCL varies depending on the utility; the current rate for electricity is £0.00485/kWh – this would equate to approximately £47k per annum for a 1MW system. The CCL for gas is currently set at £0.00169/kWh.