The changes will affect tariffs for all newly eligible FIT technologies from 1 December 2012 onwards. Changes to solar tariffs had already been announced and will take place from 1 August 2012.

The latest FIT announcement by the Department of Energy and Climate Change (DECC) came hot on the heels of news it had again delayed its final announcement on banding levels for Renewables Obligation Certificates (ROCs), which will establish new prices for larger scale renewable energy from April 2013.

Under the new FIT programme, a degression mechanism will be introduced for Anaerobic Digestion (AD), wind and hydro from April 2014 in line with uptake of these technologies. Tariffs will be published two months before the degression date and will be based on publicly-available data.

“I want to provide long term certainty for those choosing to invest in all forms of small scale green electricity generation, not just solar, and our changes to FITs will do just that,” said energy minister Greg Barker.

“As well reducing tariffs over time for AD, hydro and small scale wind in line with uptake, we are introducing tariff guarantees for all technologies, great news for projects with long lead in times like hydro power.

Dave Sowden, Chief Executive of the Micropower Council said: “We welcome what is broadly a very positive set of proposals that should bring greater confidence to investors and customers.”

Paul Thompson, head of policy at the Renewable Energy Association added the new FITS “should restore certainty to the sub-5MW sector”.

Pre-construction accreditation

Significantly, DECC is introducing a system of preliminary accreditation so all AD and hydro installations and larger wind and PV installations (over 50 kW) will be able to know before construction that they will be accredited. It will also provide certainty over tariffs for six months to two years depending on the technology. This means that if a developer gets their project up and running within the tariff guarantee timescale, they will get the tariff that applied at the time they applied for preliminary accreditation.

A system of advance tariff guarantees will also be available to non-domestic community energy PV projects up to 50 kW. A new hydro band for 100-500kW installations will also be introduced to ensure developers are incentivised to design their project at the most appropriate size.

“Community” FITs projects will be defined on the basis of existing tax law and community schemes will be exempt from an energy efficiency requirement (level D) introduced for solar from 1st April this year.

Heat incentive

DECC also set out proposals to improve the performance and manage the future budget of the non-domestic Renewable Heat Incentive (RHI) scheme, hoping to provide greater certainty to the market.

To ensure the RHI budget is managed effectively, DECC is proposing to introduce a flexible degression based system. Under the system tariffs would be reduced for new applicants if uptake approaches pre-determined trigger points.

Tests to see whether degression is needed would take place quarterly, and if a tariff reduction is needed, one month’s notice would be given. Progress towards the trigger points for each technology and the scheme overall would be monitored throughout the year and data published monthly.