Originally published 29 November 2010

On 24 November, Greg Barker, the Minister of State for Energy and Climate Change at DECC, hosted a 'Briefing and Discussion on the outcomes of the Spending Review for the feed-in tariffs (FITs) scheme'. Eversheds attended this key stakeholders' briefing and we provide this update on this briefing.

The key outcome is that the Government is characterising the amount of money available per year for FITs as a cap rather than a target. The stated amount is £360m for the FIT year 2014 / 2015. This is a 10% reduction in the previous target. DECC currently has no ability to change this amount nor the fact that it is a cap. The Government has always stated that if the target looked like it will be exceeded, and that there is to be 'higher than expected deployment' they would review and amend the tariff rates. However, this was in the context of the FIT amount being a target rather than a cap.

A further concern was that Mr Barker stated that "greenfield" ground based solar PV was at risk of a reduction of a FIT. The reasoning for this was unclear but it appears to be as a result of the amount of FIT that would be paid to owners / developers of this type of installation. Mr Barker stated that the FIT was originally, and in his mind continues to be, for "consumers and communities". The inconsistency here is that if the concern is economic then this would affect all large scale installations that would benefit from FIT.

DECC are to review the outcome of the discussions in more detail but we would urge:

  • clarity and certainty is provided at the earliest opportunity without unnecessary and unhelpful comments being made that result in uncertainty and therefore lack of funding
  • there is a period of time during which there are no amendments to the FIT so that owners / developers can develop without risking a reduction in the FIT during the build-out phase
  • that any review of the FIT is evidence based

We would further urge that the rationale behind capping the FIT is revisited. Given the targets that the Government has set itself in relation to renewable energy, any U-turn is detrimental not just to the projects that require FIT subsidy, but also to the credibility of the UK as a place which has regulatory certainty, a key requirement for an investment.

For further information or advice, please contact:

Michelle Thomas, Partner
Head of clean energy and sustainability
Tel: 0845 498 7553
michellethomas@eversheds.com

Stephen Hill
Partner
Tel: 0845 497 7572
 stephenhill@eversheds.com

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