Delivering Infrastructure - Feed-in Tariff review and impact on large scale solar projects
20 Jan 2016
The Paris Climate Change Agreement has been labelled an historic deal, with governments around the world agreeing to a long term goal of keeping the increase in global average temperature to well below 2oc above pre-industrial levels and with an aim of limiting the increase to 1.5oc. The UK’s 2008 Climate Change Act emissions’ targets were based on the global ambition at the time of keeping central estimates of temperature rise close to 2oc. The Committee on Climate Change will be advising the UK Government of the implications of the Paris Agreement on energy targets in early 2016. However, it is clear that at the very least the UK must keep to its existing targets and support the low carbon energy industry.
A key element of the Government’s strategy to support low carbon projects has been the Feed-in Tariff (FIT). The Tariff has been under review and on the 17 December last year, the Government published a ’response to the consultation on a review of the Feed-in Tariff scheme’. Whilst most of the new tariffs under the Scheme provide for a higher rate of return than previously consulted upon, the future trend is for significantly lower returns on all PV, wind and most hydro projects than at present. Furthermore, the Government is planning to introduce a new system of caps from 8 February 2016, which will limit expenditure under the Feed-in Tariff in each quarter. The Government’s view is that as the cost of energy deployment falls, it is only right that subsidy levels should fall too. However, the key question is have the FITs been set at the right levels or will low carbon energy projects now fall by the wayside on viability grounds?
Our experience at NLP has been that even with the drop in FIT, large scale solar projects are still progressing and in all likelihood they will continue to do so, as landowners adjust their expectations and reconsider the land value for solar farm schemes. It remains to be seen however, whether the reduction in subsidies will result in fewer planning applications for solar farms over the next 12-18 months.
With lower subsidies, it is more important than ever for solar projects that are being taken forward to save money where possible. The planning system is often seen as a burden for renewable energy projects and the requirement to undertake am alternative site assessment for solar projects can be a particularly onerous. NLP has designed a toolkit to make this process as efficient as possible and we will continue to work with our solar energy clients to ensure that those projects going forward adequately and efficiently address any planning issues that might arise.