Feed-in Frenzy

Feed-in Frenzy

The UK Government has released the details of its long-awaited feed-in tariff policy. The move sets a precedent for many other countries to follow and will hopefully reduce reluctance to do so elsewhere in the world.

The British proposal has contributed several innovative twists to feed-in tariff design that will mark the program as “made in the United Kingdom”. One new feature is the inclusion of tariffs for Combined Heat & Power (CHP). While not a first, it is one of the few programmes to do so. Another feature of the proposed program is a distinct tariff for small solar PV systems on new homes, and a separate tariff for existing homes.

Most significantly, the initiative includes a mechanism to encourage homeowners and small businesses to reduce their electricity consumption. For example, a solar PV generator will be paid for all their own generation and will receive a bonus, currently at £0.05/kWh, for electricity delivered to the grid over and above their own domestic consumption. Thus, if a homeowner is able to cut their domestic consumption, and sell more electricity to the grid as a result, the generator is paid the bonus on top of the posted feed-in tariff.

The proposed programme is designed to set tariffs at a level to encourage investment in small scale low carbon generation. The new tariffs have been structured to deliver a reasonable return on appropriately sited technologies, and will help to meet the UK’s renewable energy and carbon mitigation targets.

Britain’s feed-in tariff program is expected to begin in early April, 2010 after an extensive consultation.

Andrew Ogilvie, Director of Virtus commented, “The Feed-In Tariffs represent an exciting opportunity for built asset owners and tenants to generate an additional revenue stream from their operations as well as providing incentive to reduce their own energy use. With our integrated Energy Management and Renewable Energy services we can make sense of the new policy for clients, identify their opportunity in hard financial terms, undertake the technical studies to validate the options, procure and project manage new installations and put in place robust through-life operation and management plans. Now is the time for businesses to look at the benefits of new energy technologies – and we are here to guide them through it.”