Solar panels make up 99% of installations registered under the Feed-in Tariff scheme, and account for nearly 5 gigawatts of capacity. But the scheme looks likely to end in 2019,
The governnment has announced its intention to close the Feed-in Tariff (FIT) scheme completely to new entrants from 31 March 2019. The scheme was introduced in 2010 to provide a guaranteed income for small-scale renewable energy installations, such as solar panels and wind turbines. In 2015 it was announced that the generation tariff would end in 2019, but now it looks likely that the export tariff will be axed as well, marking the end of FIT.
The government is consulting on the proposals, which form part of a wider review of small-scale low-carbon energy generation, and comes in the wake of publication of their 'Clean Growth Strategy'. The changes will not affect existing members of the FIT scheme, at least as far as we know.
Hoping for 'market-based solutions'
The scheme has exceeded early expectations for deployment, with over 800,000 installations registered by the end of 2017. Although tariff rates have been slashed by some 90% of the original rates, the cost of the scheme has risen to nearly four times the original projection and is now estimated to be £1600 million per year by 2020. This cost is funded by levies on suppliers, which are passed onto their customers. Hence the government has decided to call time, and expects the renewables sector to find 'competitive, market-based solutions' instead.
The renewables industry has reacted to the proposal with disappointment. Emma Pinchbeck, Executive Director of trade body RenewableUK, described it as "a major blow to small-scale renewables in the UK. The Government has known the FIT would be closing for three years and the fact that they are only now beginning the conversation about new policies is far too little, far too late."
Many groups fear a complete loss in confidence for new solar projects, and argue that without the certainty of a guaranteed export tariff there will be a dramatic fall-off in installations by householders, farmers, community groups and small businesses. These will be effectively providing power to the grid for free, thus subsidising the big energy companies.
Brave New World for renewables?
So what does the future hold for small scale renewables? The consultation comes against a background of falling installation costs and rapid technological developments such as battery storage and smart metering and appliances. Demand for electricity is likely to rise over the coming years, especially with increased use of electric vehicles. This sets the scene for rapidly changing patterns of supply and demand, with a more responsive and flexible decentralised grid, where power is increasingly being generated at or near people's homes instead of in remote power stations.
These potentially enable energy suppliers to offer a range of 'smart tariffs' to encourage householders to switch demand by using appliances when energy is cheaper - e.g. running your dishwasher or washing machine overnight instead of in the early evening. It also means that households that generate their own energy, e.g. from solar panels, can accurately measure what they export to the grid and be paid accordingly by the supplier - at least this is what the government is banking on.
This gives small scale generators the flexibility to store their electricity to use themselves (e.g. in the evenings) or to export it to the grid during periods of peak demand. This maximises savings on energy bills and also potential revenues from exports. Storage has the overall effect of flattening the peaks and troughs in energy demand, which helps to balance flows through the grid and enhance efficiency of transmission.
The government acknowledges the important contribution of small scale renewables and is calling for ideas on how the sector can be supported in a post-subsidy environment. The consultations close on 31 August (Small Scale Renewables) and 13 September (Feed-in Tariffs).