The Government has this morning announced the start of the first review of the Feed in Tariffs (FITs) scheme for small scale low carbon electricity generation. As part of the review, the Government will undertake a short study into the take-up of FITs for farm based Anaerobic Digestion plants.

Announcing the review, Minister for Energy and Climate Change Chris Huhne expressed his disappointment at the lack of farm based Anaerobic Digestion plants currently accessing FITs. Only two such projects have been accredited so far and by this point at least six were expected. The Government will now look again at the tariff rates inherited from the previous administration to see if they are enough to make farm based Anaerobic Digestion worthwhile.

Chris Huhne commented:

“Since the scheme began last year more than 21,000 installations have registered to date. The vast majority of these are domestic installations, including solar panels, wind turbines and micro hydro installations. The scheme is working well. The take-up of solar photovoltaic (PV) panels under FITs has been a success with 20,000 installations now registered. However, there is room for improvement. I am concerned about the impact of super-size solar installations. I am also disappointed at the lack of farm based Anaerobic Digestion plants currently accessing FITs.”

Concerns about large scale solar FITs projects

The Government has become increasingly concerned about the prospect of large scale solar PV projects under FITs, which was not fully anticipated in the original scheme - if left unchecked, the projects take a disproportionate amount of available funding or even break the cap on total funding.

The recent Spending Review committed to improving the efficiency of FITs and finding £40million of savings, around 10%, in 2014/15. Several large solar installations have already received planning permission and industry projections indicate there could be many more in the planning system.

The Government has decided to bring forward the review of the Scheme in view of the risk that such schemes could push FITs uptake off trajectory and could make the Spending Review savings difficult.

The new initiative is intended to be a comprehensive evidence-based review of the FITs scheme. To provide further certainty to the renewables industry, next month the Government hopes to publish measures to support renewable heat within the envelope agreed at Spending Review.

The FITs review will:

• Assess all aspects of the scheme including tariff levels, administration and eligibility of technologies
• Be completed by the end of the year, with tariffs remaining unchanged until April 2012 (unless the review reveals a need for greater urgency)
• Fast-track consideration of large scale solar projects (over 50kW) with a view to making any resulting changes to tariffs as soon as practical, subject to consultation and Parliamentary scrutiny as required by the Energy Act 2008.

The Government said it would however not act retrospectively and any changes to generation tariffs implemented as a result of the review would only affect new entrants into the FITs scheme. Installations which are already accredited for FITs at the time will not be affected.

The Government sees decentralised renewables as vital to green growth, describing the FITs scheme to date as “highly successful at stimulating growth, driving innovation, creating jobs and cutting carbon.”