UK: Government Announces Consultation To Change The Extensions Provisions Under The Feed-In Tariff Scheme

Last Updated: 29 July 2011
Article by Michelle T. Davies, Jean-Pascal Boutin and Stephen Hill

Originally published 28 July 2011

Yesterday, the Government launched a consultation to change the provisions dealing with the treatment of extensions to installations under the UK Feed-in Tariff scheme.

Background

Under the current FIT Order there is the ability to extend an existing accredited Eligible Installation within 12 months and to still obtain the FIT Tariff that would have been applicable to the extended installation as at the original installations 'Eligibility Date'. The combined installation will then be treated as having a new declared net capacity, and if applicable, a new tariff code and tariff rate. The Eligibility Date will remain the same.

Following DECC's announcement that there would be a change to the FIT for large scale solar PV projects (anything over 50kW) and stand-alone solar projects with an Eligibility Date on or after 1 August 2011 (subject to no objections), developers have looked to the extensions provisions to enable projects to receive the current banding support under the FIT Scheme. This consultation is a response to the concern that many developers will use the extensions provisions to benefit from pre fast-track tariffs post 1 August 2011.

Key points of the consultation

The key points on the Government's proposal include:

  • Extensions commissioned within 12 months of the original installation will be treated as a single new installation from the point of commissioning the extension.
  • The tariff rate (and size) will be those that apply at the time of commissioning the extension and not as at the original installations Eligibility Date as is currently provided for.
  • The tariff lifetime of the combined (new) installation will be reduced by the length of time between the Eligibility Date of the original installation and the Eligibility Date of the extended installation. This means that the entire installation will be subject to the current lower tariff and the extension will also be eligible for a shorter time i.e. the Eligibility Period runs from the Eligibility Date of the original installation and not the commissioning of the extension.
  • Extensions made more than 12 months after the original commissioning are unaffected.
  • The changes are intended to apply to all technologies in the FIT. There are implications for AD plants up to 500kW, which might be able to extend existing plant and have the whole installation benefit from the higher tariffs applying from 1 August 2011.

There are no clear timelines provided in the consultation but the new rules proposed apply to all extensions commissioned after the changes come into force. It is noted that installations commissioned before the changes come into force will be unaffected by the proposals. It was noted earlier that changes need to be made to the Suppliers Licence Conditions but the original DECC release was incorrect and has subsequently been amended to reflect the fact that the changes that need to be made are just to Article 15 of the Feed-in Tariffs Order, which will be done as soon as possible. The consultation closes on 31 August 2011. There is now no incentive to extend given the fact that not only will the entire installation be subject to the new lower tariff but also the length of eligibility will run from the Eligibility Date of the original installation and hence the extended part will not get the full 25 years support. Although this was anticipated, these changes mark the final stage in the Government's attempt to cull large scale solar projects and the industry will be damaged by its effect.

For more information or advice, please contact:

Michelle Thomas
Partner, Head of Clean Energy and sustainability
Tel: 0845 498 7553
michellethomas@eversheds.com

Stephen Hill
Partner
Tel: 0845 497 7572
stephenhill@eversheds.com

Jean-Pascal Boutin
Partner
Tel: 0845 498 8265
jeanpascalboutin@eversheds.com

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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