WET News

january 2016 WET NEWS 13 The next round of Feed-in-Tariff (FIT) degressions come into force from March 31, 2016. Companies must act now to ensure anaerobic digestion (aD) projects secure high subsidy rates, warns CooperÖstlund's johan Ostlund. The challenge: Delaying AD installations could prove costly site at water companies, food manufacturers or recycling businesses to turn organic waste, wastewater or sewage into renewable energy. Energy targets In fact, such has been the success of the financial support for AD installations that the industry now exceeds 500MW of total capacity across 411 plants nationally, making a significant contribution to the UK's renewable energy targets. FITs have transformed the way the UK generates its power over the past three years, with more than 22% coming from renewables in the early part of 2015. However, this has come at a price and the Department of Energy and Climate Change INSIGHT renewable energy DeCC projects spending on clean energy support will be as much as £1.5bn over budget by 2020/2021 (DECC) admits spending on clean energy support is projected to be as much as £1.5bn over budget by 2020/2021. In a bid to keep the budget under tighter control, the government introduced the FITs degression mechanism, which automatically reduces the level of subsidy available to new projects once a certain level of deployment is reached. Now, as part of the latest review, DECC wants to cut expenditure on the FITs scheme to between £75M and £100M from January 2016 to 2018/19 and has significantly reduced the rates it will pay. As part of these latest FITs degressions, financial support for AD sites will decrease significantly from the end of F eed-in Tariffs (FITs) were introduced by the govern- ment in 2010 to help increase the level of renewable energy generated in the UK. The subsidy outlined that renewable generation systems, up to a capacity of five megawatts (MW), were eligible for financial support for producing green energy. Alongside helping the UK towards its legally binding EU target of 15% of total energy from renewables by 2020, the incentives aimed to drive long- term investment in renewable technology and innovation. Since its introduction, the scheme has been hugely successful. In 2014 alone, the anaerobic digestion (AD) industry installed 89 new plants in the UK, a high percentage on March 2016. In fact, the tariff for facilities under 500KW will reduce from 10.54 to 9.36p/Kwh, while facilities greater than 500KW will drop from 9.16 to 8.68p/Kwh. Tactic In another, perhaps more immediate blow to the industry, the government has also removed the opportunity to pre- liminary accredit renewable energy sites. Introduced as a tactic to freeze FIT rates, pre- liminary accreditation previ- ously allowed a registered AD facility to secure positive rates and avoid degressions for up to a year – allowing owners to complete project build without rushing to safeguard subsidy rates. The changes mean that facilities will now only qualify • for FIT rates offered on the date of commissioning – making it harder to propose investment return figures and making project delays potentially very costly. If, following all of these changes, the government is still unable to curb spending on renewable subsidies and decides the FITs scheme is unaffordable, they could end it to new applicants. Even if the scheme does stay in place, then the FITs subsidy rates will con- tinue to fall further in future years. With little time to go until the government implements the latest FITs degressions, if AD site development and commis- sioning is leŸ too late, then companies could be leŸ with significant financial losses as a result.

• Cover