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Monday, 24 August 2015

UK government accused of running flawed Feed-in Tariff consultation

The Renewable Energy Association (REA), RenewableUK and the Anaerobic Digestion and Bioresources Association (ABDA) have all accused the UK government of running a flawed Feed-in Tariff consultation.

"The UK's leading renewable energy trade bodies have formally complained to the Department of Energy and Climate Change (DECC), accusing it of trying to rush through "damaging" changes to the popular feed-in tariff subsidy scheme.

Renewable UK, the Renewable Energy Association (REA), British Hydropower Association, and Anaerobic Digestion and Bioresources Association (ABDA), have all accused DECC of failing to comply with Whitehall best practices, when the department launched a four-week consultation during summer recess without publishing an impact assessment alongside it.

In the consultation, which officially closed yesterday, DECC proposed removing a key element of the feed-in tariff policy, known as pre-accreditation, which sets the level of subsidy a project can expect to receive before it is built. The measure gives certainty that a project will be protected from any cuts to the subsidy rate for 12 months of the construction phase.

The government wants to remove pre-accreditation as an emergency measure to reduce the attractiveness of small-scale renewable energy technologies, ahead of a full-scale review of the feed-in tariff scheme later this year.

DECC argues the changes are required to ease pressure on the UK's levy control framework (LCF) clean energy subsidy budget, which officials fear could overshoot its target by £1.5bn by 2020. Government figures suggest that feed-in tariff spending could nearly double from £1.1bn this year to £2.1bn in 2020/2021.

DECC also argues the feed-in tariff policy is overachieving on its goals, as it has already delivered more than 700,000 renewable energy installations against an expectation of 750,000 by 2020.
But the letter sent on Tuesday, which is also signed by the Solar Trade Association, Scottish Renewables, and Community Energy England, argues DECC is trying to rush the changes through without proper scrutiny by launching the consultation in the middle of the summer holidays.
It says the policy should have been at least 12 weeks to give all interested parties sufficient time to respond.

The trade associations also complained that the consultation lacked an accompanying impact assessment, which made it "impossible" for respondents to answer the consultation questions appropriately.

Supporters of the current policy argue it is critical for mobilising investment in small-scale renewables projects from community groups and businesses – sectors ministers have previously said they want to see stepping up investment in clean energy capacity. Industry insiders fear without pre-accreditation financial directors will be reluctant to sign off investments in new renewables projects, because of the risk that even minor project delays could result in installations receiving a lower level of incentive payments than expected.

Separately, RenewableUK said its members had already reported a hiatus in project development and were struggling to secure financing as a result of the changes.

"Renewable energy projects are unlike fossil fuel projects," RenewableUK states in its official consultation response. "There is not a cheap upfront cost followed by an expensive fluctuating operating cost that can simply be passed on to customers as and when commodity prices increase.

"Renewable energy projects have a one-off upfront cost, and require some degree of certainty as to the income that they will receive for the energy generated once in operation, in order to judge the viability of the project."

RenewableUK also accused the government of using "a false argument" by claiming pre-accreditation is to blame for surges in feed-in tariff spending. It said that in fact the opposite was true, and that the mechanism gave the government greater visibility over the future project pipeline.
Individual developers have also complained about the changes. Brett Pingree at Endurance Wind Power said farmers would be hit particularly hard by the removal of pre-accreditation.

"Even small wind projects take a long time to install because of lead times involved in securing planning approval and grid connection, as well as weather and periods of site inaccessibility such as during planting, growing and harvest seasons," he said. "For this reason, the 12-month allowance to complete the project becomes critical for arranging finance, as without the assurance of the FIT rate, banks will not provide loans."

Along with the rest of the industry, Pingree says the government should introduce the changes at the same time as the upcoming wider feed-in tariff review, to provide more certainty to investors about the future shape of the policy.

A spokeswoman for DECC was formulating a response to BusinessGreen's request for comment at the time of publication.

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