An International Energy Agency Report in November 2020 found that renewables were set to account for 90% of the increase in worldwide power capacity in 2020, with rapid growth expected in 2021. At the same time, the pace of evolution and change in the field of UK subsidies for small-scale renewable energy generation has, other than one or two pandemic-related extensions, continued on the same trajectory as witnessed over the past decade. This blog will highlight some of the latest developments.
Nine months after the closure to new applicants of the Feed-in Tariff (FiT) support scheme for small-scale renewable electricity generation and export (eg from small wind turbines or solar panels), the pared-back replacement, the Smart Export Guarantee (SEG), became available on 1st January 2020. See my previous blog on the background to the SEG and the UK government consultation here.
The final details of the SEG were much as were consulted on, with only minor amendments such as the number of customers a licenced electricity supplier must have before being obliged to offer a SEG (down from 250,000 in the consultation to 150,000 in the final scheme). In particular, many responses to the government consultation expressed concern that there should be a minimum tariff but, in the end, as proposed in the consultation the only requirement is that the tariff offered has to be above zero. The current average tariff available is around 3.5p per kWh, with the best tariffs around 5.5p per kWh and the worst around 0.5p per kWh.
The export tariff under the FiT scheme was latterly 5.5p per kWh, so the SEG seems only to be going part of the way to filling the shoes of that aspect of the FiT scheme, with the FiT tariffs for simply generating renewable electricity now a thing of the past for new developments.
Renewable Heat (UK)
In spring 2020, the UK government launched two consultations on renewable heat. One, on future support for low carbon heat (including proposals for Clean Heat Grants of up to £4,000 for heat pumps and potentially biomass boilers installed in homes and non-domestic premises to replace the existing Renewable Heat Incentive (RHI)), closed on 7th July 2020 but no response has yet been published.
The other consultation was on the future of the non-domestic RHI itself, which was a world-first financial incentive scheme launched in November 2011 providing tariff payments to generators of renewable heat from eligible technologies. The outcome of this consultation was that the non-domestic RHI would close to new applications on 31st March 2021. Without proposals for new Clean Heat Grants having been finalised, it looks like there will be another gap between the closure of an existing scheme and launch of a replacement, similar to the one we saw with the FiT and the SEG.
However, over the course of the coronavirus pandemic the government has announced an extension of the domestic RHI to 31st March 2022 and a number of allowances for Covid-related delays in both the domestic and non-domestic schemes. Previously, an applicant to the domestic scheme only had to apply within 12 months of commissioning the heat generating installation and the government now proposes to amend this to give any installation commissioned on or after 1st March 2019 right up until 31st March 2022 to apply.
For the non-domestic RHI, if resources were invested in development of a project before 17th August 2020 but it is not possible, due to the pandemic, to have the project accredited under the scheme by its closure on 31st March 2021, the developer will be able to apply for a twelve month extension. Their application must be made in March 2021 and evidence will be required. In addition, if a project had secured a "tariff guarantee" under the scheme rules, provided it has reached a certain stage by closure of scheme it will also have until 31st March 2022 to commission.
Energy Efficiency and Renewable Heat (Scotland)
Separately to the UK schemes and proposals, in November 2020 the Scottish government launched a £4m cashback grant scheme for small- and medium-sized enterprises and a £4.5m cashback scheme for homeowners, to help fund the installation of energy efficiency measures and/or renewable heating systems.
These grants will form part of existing loan schemes and offer between 30% and 75% cashback, with a business potentially being able to claim up to £20,000 and a homeowner £13,500. A claim for this cashback can however prevent an installation being eligible for the RHI and the homeowner scheme is only available until the end of the financial year 2020/21.
In conclusion, although some renewables projects can take a considerable time to plan, install and commission, the financial incentives (on which the viability of many projects depends) continue to be revised, discontinued and (not immediately) replaced. At a time when a green recovery from the coronavirus pandemic, a new coal mine in Cumbria and opportunities for the use of vacant and derelict land in Scotland for renewables are all being discussed, it can be tricky to see the biomass for the trees. It is however crucial to stay on top of deadlines, cut-offs and latest developments.
If you would like advice on any aspect of small-scale renewables, please contact Alistair Rushworth or your usual Turcan Connell contact, who would be happy to assist.