Ownergy

What happens if I extend my system

In principle the extension is treated as a new system and registered separately.

BUT the tariff will be based on the combined capacity of the original system plus the extension.

The existing FITs registration on the original system will be unaffected.

There used to be concessions for extensions within 12 months of the original installation, but these have effectively been rescinded.

See more here.

Why are the tariffs being reduced if deployment is below the threshold?

Even though contingent degression is related to the level of deployment as described here, the government has decided that there can only be two successive quarters with zero degression.

Therefore if the last two degression levels were zero, the next quarter will see degression at the default level even if deployment is below the default corridor.

The government said:

Degression can only be skipped for two successive degressions, so there will be a minimum of 3.5% degression every 9 months to incentivise ongoing reductions in installation costs.

What is a community energy project?

It is an energy project undertaken by one of the following:

  • a community interest company (CIC);
  • a co-operative society; or
  • a community benefit society

The government has further restricted the definition in the case of FITs:

To be defined as a community energy project within the FITs scheme, eligible entities must have no more than 50 employees

What tariff will pre-accredited installations receive?

In general the tariff applicable when they applied for preliminary accreditation, but with one exception.

This from the Phase 2B review:

Once accredited, installations found to be eligible for preliminary accreditation, will receive the tariff that they would have received if they had accredited at the time they applied for preliminary accreditation. However, installations that are granted preliminary accreditation with an effective date in the period 1 January to 31 March each year will be eligible for the tariff that applies from the following April. Tariff lifetimes will apply from the eligibility date.

What are the pre-requisites for preliminary accreditation?

In addition to being in one of the appropriate tariff bands, projects must establish that they are likely to get built by having:

  • planning approval

  • evidence of acceptance of a firm grid connection offer, if a grid connection is needed; and

  • for hydro installations: relevant environmental permits from the Environment Agency or Scottish Environment Protection Agency.

What is the definition of a ‘site’?

This is not specifically defined in the legislation, so Ofgem's guidance notes say how it will make the assessment:

The site where eligible installations or accredited FIT installations are situated in close geographical proximity to each other is determined with reference to:

  • The relevant Metering Point Administration Number (MPAN)
  • Installation location address (including post code), and/or
  • Installation location Ordnance Survey (OS) grid reference
  • Any other factors that Ofgem considers relevant. For example, we would also consider the planning situation and any electrical or mechanical interactions between the Installations.

Some specific instances were addressed in the 2011/12 review.

How has the definition of site changed following the 2011/12 review?

The fundamental definition remains unchanged, but government says it intends to clarify that:

  • several installations e.g. wind turbines or solar panels at a single location are not treated as separate sites because they register separate MPANs;

  • separate residential units on a private wire network (i.e. park homes) are treated as separate sites; and

  • hydro installations that are physically separate are not treated as a single site because of DNO constraints that do not allow them separate connections.

How would emergency 6-monthly degression operate?

This is all too complex (so let's hope it doesn't happen).

The best we can do is refer you to Box 1 on page 20 of the government's decision paper from the Phase 2B Review.

When would emergency 6-monthly degression apply?

If deployment in the first half of the year exceeds 2/3 of the top level of the default corridor. The Phase 2B Review decision said:

We expect that the system of annual degression will provide the basis of tariffs in the longer term. However, in order to provide additional assurance that the scheme will be able to remain within budgets in instances of extremely high deployment, we will introduce, an additional mechanism which allows a mid-year degression (the first of which could occur in October 2014) based on uptake in the first six months of the year.

Six-month deployment thresholds will be two-thirds of those for annual deployment.

Accordingly, we foresee that the six-monthly degression mechanism will only be needed in exceptional circumstances. Under ordinary deployment conditions, where a contingent degression is not required, degression will occur as normal in April only.

How are RO-linked tariffs degressed?

In principle these bands aren't subject to degression as such, but will stay linked to the equivalent RO price. The Phase 2B Review decision said:

Tariffs in the bands set at levels equivalent to the RO will not be subject to annual degression changes unless deployment in the relevant band in the previous year is greater than 150% of the expected level. However, deployment in these bands contributes to the deployment thresholds and may therefore affect degression rates in other bands. If degression is applied to these tariffs, later years’ tariffs will be determined according to the normal degression rules (i.e. were the RO equivalence in a band broken by the need for a 10% degression, normal degression rules would apply from that point on).

How are tariffs linked to pricing under the RO?

You want the simple answer? Tough!

All we can do is refer you to the wording in the Phase 2B Review decision

we will adjust generation tariffs for these bands to levels we consider to be equivalent to the support currently available under the RO. These are calculated using a value of £44.78 per ROC, which is 1.1 times the 2012/13 buyout price. Generation tariffs from 1 April 2013 until 31 March 2017 will be set at a level equivalent to the levels of support provided under the RO to a 5MW plant as a result of the RO Banding Review. Tariffs for 2017/8 and beyond are set at the level of 2016/17. However we expect that tariffs will be reviewed before this time, particularly given the wider context of Electricity Market Reform, so this should be taken as an indicative position in the interim.

Which tariff bands will be linked to pricing under the RO?

Those tariffs for sizes up to 5MW for most RO-eligible technologies.

This approach applies to the hydro band 2-5MW and the wind band 1.5-5MW.

However, the same does not seem to apply for PV, where the government said on their decision document following the Phase 2A review:

Although the majority of respondents to the consultation indicated a preference for the approach to degression to change once tariffs reach the financial equivalent of two Renewable Obligation Certificates [the support for solar PV under the RO], our updated analysis of PV installation costs suggests that a rate of return of nearly 8% can be achieved for large scale PV installations for a tariff considerably lower than 2 ROCs.
We have therefore decided that the degression mechanism should continue to operate when tariffs reach the equivalent of 2 ROCs, to minimise the risk of investor overcompensation and to limit the total cost of FITs support.

Are the tariff levels published following the Review now set in stone?

Not necessarily! From April 2013 some tariffs (for larger systems up to 5MW) may be adjusted further depending on the equivalent RO banding. The Phase 2B Review decision said:

Generation tariffs for the largest capacity band for each technology will continue to be consistent with support under the Renewables Obligation, and will be adjusted in line with current support levels and the outcome of the RO Banding Review.

What is an Energy Performance Certificate?

An Energy Performance Certificate (EPC) is issued by a qualified assessor to show how energy efficient a building is. It shows the result with a rating between A and G, where A is the most efficient.

Further details are available here.

What is the RO banding review?

The Renewables Obligation (RO) supports renewable generation above 5MW (and some projects between 50kW and 5MW). It provides an incentive not in the form of a fixed tariff, like the FITs, but by awarding green certificates called Renewable Obligations Certificates or 'ROCs'.

When the RO was first introduced, all technologies received one ROC for every MWh of electricity delivered. The RO has subsequently been 'banded' with some renewable technologies, such as solar PV receiving 2 ROCs per MWh. Some (like offshore wind) get 1.5 ROCs; others still get 1 ROC; while others get less than 1 ROC.

The banding review is reassessing how many ROCs should be awarded to each technology band under the RO.

What is the REAL Code?

It is a code of conduct developed and monitored by Renewable Energy Assurance Limited, setting out good practice, which suppliers should follow when selling renewable energy systems.

Suppliers registered under the Microgeneration Certification Scheme must follow the REAL Code (or an equivalent). Because the MCS is a pre-requisite for systems up to 50kWe, or 45kWth under the Renewable Heat Incentive, suppliers of such systems should be registered under the REAL Code.

Why did the Supreme Court refuse permission for the government to appeal?

The Court believed that the Appeal Court was correct in ruling that the government's attempt to change tariff levels retrospectively was unlawful.

It said:

Permission to appeal was refused because the application does not raise an arguable point of law of general public importance which ought to be considered by the Supreme Court at this time, bearing in mind that the case has already been the subject of judicial decision and reviewed on appeal.

Why did the Appeal Court rule that the government’s proposed FITs changes were illegal?

The Court said the proposed change was effectively retrospective because (as summarised by the supreme court ruling):

The Court of Appeal upheld the Administrative Court's judgment that it is not within the power conferred on the Secretary of State by the Energy Act 2008 to reduce the tariff paid for electricity generated by small-scale solar photovoltaic generators, in respect of installations becoming eligible for payment prior to the coming into force of the modification.

This gives comfort that the government cannot change tariff levels applicable to systems installed before the new tariff levels have been approved by parliament.

What if I own more than one installation - will I be paid less?

Not unless you are in receipt of tariffs for more than 25 solar PV installations.  If that is the case, you will receive a lower tariff.  These lower tariffs are in the third column of the table linked here, and described in the footnotes to this table.

Does my property need to have a certain level of energy efficiency to be eligible?

Yes - but for solar PV systems only.  From 1 April 2012, the property to which your solar PV system is electrically connected (or attached) must have an Energy Performance Certificate rating of D or better.

What happens if I start earning the Feed-in Tariffs and then I move house?

 

A FITs registration is specific to a defined system in a specified location. It would lose eligibility if you dismantle the system and move it elsewhere.

In principle, therefore, when you move house, you have two choices.  The first is to sell the system along with the house to the new occupants, who would then receive the tariffs.  This is the most common option taken.

Alternatively you could in theory retain ownership of the system.  In this case, you could continue to receive the generation and export tariffs, but would have to reach agreement with the new occupants about leaving your system on their roof. As part of this arrangement, you would probably allow them to have the benefit of the free electrical generation.  This is a much less used option as it is difficult to set up legally.

When does the Feed-in Tariff scheme end?  I heard it is April 2015?

The government's "annual budgets" for the Feed-in Tariff scheme have only been set until 2015.  However, the scheme is intended to be kept open to new entrants until 31 March 2021.

What happens if I extend my system which is already receiving Feed-in Tariffs?

 

If the time that will have elapsed between the registering of your initial installation and the registering of your extension is less than 12 months, you will receive the tariff that prevails at the time of registration of your extension for the whole (combined) system.

If the elapsed time between registrations is more than 12 months, you will continue to receive the level of tariffs that the initial installation has always received.  As for your extension, this will receive the level of tariffs that prevails at the time of registration of your extension for the combined system size.

I heard the tariffs are going down on 12 December.  Am I affected?

The cut in tariffs only applies to installations registered on or after 12 December 2011.  It does not apply to installations that are already receiving tariffs.  If you are already receiving tariffs, you will continue to receive your current rate (going up with inflation).

If you register a system on or after 12 December 2011, you will receive the pre-December tariff until 31 March 2012, and then the reduced rate thereafter.

Note that the 12 December 2011 cut-off may be brought forward to 3 March 2012 (if the government loses its appeal against legal action being taken against it).  However, it is safer to assume that the lower tariffs will be applicable from 12 December 2011.

When do the reduced PV tariffs apply?

The tariffs apply immediately to all installations registered after 31st March 2012.

However any installations after 3rd March 2012 will receive the existing tariffs only until 31st March 2012, whereafter they get the new reduced rate.

The government consultation (adjusted to reflect the new reference date after the legal challenges) would read:

44. The new tariffs will come into force from 1 April 2012 but will apply from that date to all new PV installations with an eligibility date of on or after 3rd March 2012 (the ‘reference date’). Existing generators with an eligibility date before the reference date will not be affected by the proposed change in tariffs.

45. The effect of this is that, depending on the result of the consultation, installations with an eligibility date that falls between the reference date and 31 March 2012 will receive the current tariff for that period only, and will then move to the new tariff from 1 April 2012. Those installations with an eligibility date on or after 1 April 2012 will start immediately on the new tariff.

What is meant by ‘aggregated projects’ to which the ‘multi-installation’ tariffs would apply?

It's basically where the same tariff beneficiary has more than one tariff-registered installation.

Paragraph 51 of the government consultation said it:

would apply to any solar PV installation where the FIT generator or nominated recipient already owns or receives FITs payments from one or more other PV installations, located on different sites. Specifically, we propose that the multi-installation rate would apply:-

(i) if the FIT generator (whether or not the person in receipt of FIT payments) is either the FIT generator or the nominated recipient for FIT payments for any other solar PV installation; and

(ii) if the nominated recipient for FIT payments (where there is one) is either the FIT generator or the nominated recipient for FIT payments for any other installation.

Are renewable energy installations eligible for Enhanced Capital Allowances (ECAs)?

At present some are, but the Treasury intends to remove this privilege from all equipment eligible under the Renewable Heat Incentive and the Feed-In Tariffs. There is a consultation on this issue which closes on 31st August 2011.

The government justifies this move, saying:

the tariff levels for FITs and RHI are carefully set to provide a sufficient investment incentive, and any extra incentives to invest in these technologies is not appropriate

Are Feed-In Tariffs eligible for EIS and VCT tax breaks?

Yes at present, but for many this is to be stopped from 2012, further to an announcement in paragraph 2.38 of the 2011 Budget.

This says:

The Government will consult on options to provide further support for seed investment, simplification of the EIS rules by removing some restrictions on qualifying shares and types of investor and refocusing both EIS and VCTs to ensure they are targeted at genuine risk capital investments. Feed in tariffs businesses will be added to the excluded activities list.

However some concessions were made in the Treasury consultation in July 2011. This sets out the proposals for the exclusion in sections 4.16 to 4.21, including:

4.19:  Based on the discussions with stakeholders, the legislation ensures that community interest companies, co-operative societies, community benefit societies and Northern Ireland industrial and provident societies will continue to qualify, as will trades generating electricity by hydro power or anaerobic digestion.

Why is the government limiting spending on the FITs - it’s not their money?

True - the FITs are paid for by electricity users.

However it has been decreed that any spending caused by government legislation may be treated as public expenditure.

The official government explanation was:

The Office of National Statistics (ONS) is the ultimate arbiter of whether a UK Government policy should be classified as tax and spend in the National Accounts. Such judgments are made independently of Government. ONS are guided internationally in their decisions, but in broad terms define mechanisms as taxes where they result in compulsory payments by an individual or organisation who does not receive a direct benefit in return. This is referred to as a “compulsory unrequited payment”. This may result in a policy being classified as a tax even where money does not flow through a Government account (because the outcome is similar to Government taking in then redistributing the money).

A well-established example is the Renewables Obligation, which requires energy suppliers to purchase Renewables Obligation Certificates (ROCs) from renewables generators, or to make payments to the buy-out fund.  Because energy suppliers do not receive a benefit in return, the payment they make is defined as a tax. The redistribution of these revenues (ie the revenue received by renewables generators for their ROCs) is defined as public expenditure.

The ONS decision to treat the Renewables Obligation as a tax is published at http://www.statistics.gov.uk/articles/economic_trends/ET635Gazely.pdf

Is geothermal energy supported by the scheme?

Yes geothermal heat is supported by the RHI (but geothermal power is not supported by the Feed-In Tariffs).

Chapter 4 of the government's RHI announcement says

Deep geothermal

Deep geothermal systems, sometimes also referred to as enhanced geothermal or hot dry rocks, will be eligible for the RHI. Deep geothermal will receive the same tariff as ground source heat pumps.

Geothermal systems tend to be relatively large and there are no MCS or equivalent standards so, for the RHI, Ofgem will verify eligibility based on the documentation required from RHI applicants as part of the accreditation process.
 

Why do installations commissioned before 15th July 2009 not qualify for tariffs?

The 15th July was the date when the Renewable Energy Strategy was published, and at the time the Government announced it would be the cut-off date.

Chapter 3 of the government's RHI announcement says

We appreciate the arguments that individuals and organisations have presented for allowing installations complete before 15th July 2009 to receive support, in particular that it may discourage potential early adopters of future technologies and that the possible increase in the price of biomass caused by increased renewables take-up, may put them at a competitive disadvantage relative to those who will receive the RHI. However, given the current tight fiscal climate, the money available for the RHI must be used in the most effective way possible to help deliver new, additional renewable heat. The RHI is not a reward, it is an incentive to drive the uptake of new renewable heat; paying for something which had been installed prior to the RHI being announced would not be an effective use of public funds and cannot be justified.

It's probably of no comfort to anyone, but we think this was wrong.

Why would the Spending Review look at tariffs?

The tariffs come from energy users not the Treasury, so are not 'public spending' as such.

However, it has been decreed (by the Audit Commission, we believe) that government must be mindful of the impact of any regulatory measure that has a financial impact on the public. Clearly the Tariffs legislation has added to the cost of energy bills, so this is something the Treasury can consider.

Free solar PV offers

 

Several companies are now offering to install solar PV for free on residential roofs where the homeowner would then receive free electricity while the company collects the tariff income. There are several pros and cons of taking up such offers as outlined by Consumer Focus.

 

Is it true, local councils are banned from selling electricity?

Yes it was, under the 1976 Local Government Act. However, DECC reversed this law in August 2010.

Do I get FITs if I install a new system on an old RO site?

We believed so, but we asked Ofgem, just to be sure.

They confirmed:

The FITs Order does not discuss the building of new generating stations on the site of a previous station. Part 4 of the Order does however discuss extensions to accreditations. Assuming that the installation is completely new and not an extension to the previous generating station and that it does not utilise any residual apparatus from the previous generating station, it is unlikely that positioning a station on the site of a previous generating station would affect the eligibility of the station for FITs or that previous RO accreditation would have an impact.

How are the capacity thresholds defined?

The Government has not yet finally decided how it will define 'capacity' - the parameter used to define where the tariff levels are set. Logically the so-called 'declared net capacity' (DNC) should be used to allow for variations between renewable energy types.

What is tariff degression and how would it apply to my system?

The level of the tariff applicable to systems installed in the future will decrease with time, according to annual degression rates. The degression rate is used only to determine the tariff applicable to the system based on its registration date - once you've been allocated a tariff that rate would apply for the full 20 years.

[For example: If you install a 4kW PV system in June 2010 you would receive 41.3p/kWhr for 25 years until June 2035. If you installed it in June 2012 you would receive 21.0p/kWhr until June 2037. From August 2012 you would get 16.0p/kWh until August 2032]

Do I have to accept the 3p/unit of power exported or can I trade the electricity on the market?

You don't have to accept the fixed price; you can opt to negotiate your export price on the market. However, you will have to decide at the start of each year if you want to do this, and will then have to stick to it - you can only swap between fixed and market pricing once a year.

Is the Tariff subject to inflation?

The Feed-In Tariffs are index-linked to the Retail Price Index (RPI). It is currently proposed that the Renewable Heat Incentive will not be index-linked. See more information on the page for durations and variations for the RHI.

Which is better financially for larger systems, FITs or ROCs?

The government has tried to set the tariffs for larger systems at about the same level as the RO.

The decision on which to go for will depend on your view of the administration associated with each option, and the certainty of the price you will get under each (ROC and electricity prices are both variable and can be volatile at times).

What are the arrangements for systems already registered for the RO and wanting to transfer to FITs?

Systems under 50kW and registered for the RO must transfer to the FITs.

Systems between 50KW and 5MW have the choice of whether they convert.

Systems above 5MW cannot transfer - they have to stay in the Renewable Obligation.

Can systems already registered for ROCs stay in the RO?

Only if they are above 50kW. Smaller systems will generally have to transfer to the Feed-In Tariffs.

If I register for ROCs, can I receive the Feed-In Tariffs?

You cannot claim both Feed-In Tariffs and ROCs.

However, if you have a renewable energy system that was installed before July 2009 and was registered for the Renewables Obligation, you are eligible to switch to the Feed-In Tariffs.

How long would I get this tariff for?

The Feed-In Tariffs will be paid for a period of 20 years from the date the system is first registered, except for solar photovoltaic systems installed before 1st August 2012, where the period is 25 years. If the system doesn't last that long, of course it will stop producing kilowatt hours and no tariff will be paid.

Read detailed information on our page about durations and variations.

How much is paid for each kilowatt hour?

This varies by type and size of system - see the tariffs table to find out more.

Why are they called ‘feed-in’ tariffs?

Good question! This sort of tariff was first introduced in Germany in the 1990s and it applied only to power which was 'fed in' to the electricity grid. The tariffs in the UK apply to all the electricity the system produces, whether it is used on site or fed in to the grid, so it’s actually a misnomer (they should really be 'production tariffs').

When do the Feed-In Tariffs start? Will my system qualify?

The Feed-In Tariffs came into force in April 2010. Any system installed after 15th July 2009 qualifies. Existing systems installed before this date will qualify only if they are under 50 kilowatts and registered for the Renewables Obligation.

Are there any size limits to the FITs?

Yes, the Feed-In Tariffs only apply for systems up to 5 megawatts. That’s pretty big so will suit all household uses and most businesses, except for large factories.

Systems between 50kW and 5MW can alternatively choose to use the Renewables Obligations.

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