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UTILITY Week 4th September 2015

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14 | 4TH - 10TH SEPTEMBER 2015 | UTILITY WEEK Policy & Regulation This week Further blow as Decc threatens to scrap FIT Government considering subsidy cut as it seeks to rein in spending after £1.5bn overspend on LCF The renewables industry was bracing itself for a fight last week as the Department of Energy and Climate Change (Decc) threatened to scrap the feed-in tariff (FIT). This would be the latest in a series of subsidy cuts for the renewables sector as the govern- ment seeks to rein in its spend- ing following the revelation it overspent on the £7.6 bil- lion Levy Control Framework (LCF) by £1.5 billion. The small-scale solar industry, the largest beneficiary of the scheme, called this review "alarming" and warned it will be "hugely damaging" for the UK solar industry. Decc has suggested it would close the FIT to new applicants by January 2016 if cost control measures are not implemented or prove to be ineffective. These meas- ures include introducing new tariffs based on "fresh evidence" about the costs and rates of return on solar, wind and hydropower technologies. This could see sup- port for solar scaled back by up to 86 per cent, and some subsidies for onshore wind removed completely. The Solar Trade Association's head of policy Mike Landy said: "This is the antithesis of a sensible policy for achieving better public value for money while safe- guarding the British solar industry." Another option being considered by the government is whether a cap of up to £100 million should be placed on new FIT expenditure by 2018/19. In the consultation, Decc said: "We are proposing measures to place policy costs on bills on a sustainable footing, improve bill-payer value for money, and limit the effects on consumers who ultimately pay for renewable energy subsidies." LD WATER Incentives idea for abstraction on table Water companies could be offered reputational and financial incentives to encourage them to reduce their levels of abstraction from certain sources, as Ofwat considers recommendations made by the Abstraction Incen- tive Mechanism (AIM) taskforce. The taskforce has submitted proposals to the regulator to try to limit the impact abstraction has at environmentally sensitive sites by reducing the volume of water removed when river flows are low. It states the mechanism is "one potential tool" to reduce lev- els of abstraction and is cheaper than the alternative, which would be to change licence conditions. "In essence, AIM offers an opex contribution to helping address abstraction issues rather than a capex one, whilst at the same time offering opportunities for reputational advantage," the recommendation says. ELECTRICITY Generators cleared of misleading Grid Two generators under investiga- tion by Ofgem for potentially providing misleading informa- tion to National Grid have been cleared of any wrongdoing. An investigation by Ofgem into whether Power Balancing Services and GF Power Peaking provided inaccurate or mislead- ing information about planning consent on capacity market units entered into the capacity market auction in December 2014 has found that neither generator breached the rules. The regulator said it has closed the investigations aer both generators were able to supply relevant information that proved they had obtained the necessary planning consents for the units. ELECTRICITY Government warned over auction delay The government risks a "slow sapping of confidence" in its plans to bring forward low- carbon investment following its decision to delay the Contracts for Difference (CfD) auction, a former senior civil servant has warned. In a column for Utility Week (http://bit.ly/1NV3Une), the architect of the EMR, Jonathan Brearley, has warned the govern- ment that delaying the next round of auctions for the CfD regime means "the worst of all worlds" for investors. The new government is faced with a worrying overspend of its CfD funding pot, the Levy Control Framework, which pays out support to low-carbon devel- opers through regular auctions. As a result it has delayed its CfD auction planned for this autumn. Small-scale solar is the largest beneficiary Political Agenda Mathew Beech "Green focus in the Lords is a nod to 'greenest' claim" The Conservatives, and prime minister David Cameron, are oen mocked for their claim to be the "greenest government ever". This was made before the 2010 general election, which resulted in the Tory-Lib Dem coa- lition – which both claimed lived up to that moniker – and once again in 2015 before the election. However, those in the renew- ables sector will cast a cynical eye over this claim because Decc revealed it could scrap the feed-in tariff (FIT) regime to new minister Greg Barker, Lib Dem energy spokesperson Lynne Featherstone, and the Tory heavyweight William Hague all add to the green focus in the Upper Chamber. With the latest Energy Bill starting its journey through parliament, having a few more green thinkers in the other place is at least a nod towards the claim of this being the greenest government ever – even if scal- ing back renewables subsidies appears to show otherwise. applicants from the start of next year if it fails to cut costs. These cost-cutting measures are set to come in the form of scaling back small-scale solar subsidies by more than 80 per cent and some subsidies for onshore wind removed entirely. Cue the outrage: "This is the antithesis of a sensible policy"; "it looks as if the long-term vision has been lost"; and "it is quite simply terrible news". On the other hand, those within government will point to ongoing support for other low- carbon technologies, and the appointment of green-thinking peers to the House of Lords. Former climate change

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