BEIS yet to decide actions over FiT underspend

The Department for Business, Energy and Industrial Strategy has yet to reach a decision on what to do with unused capacity within the feed-in tariff deployment bands.

Deployment of FiT-accredited solar has continued to underwhelm and, with a review of the scheme looming, the department has yet to decide how or where to reallocate any of the circa £38 million worth of funding handed to the technology from January 2016, a decision drawn into starker context given the government’s decision not to issue any further levies to support low carbon technologies until 2025 at last week’s Budget.

At the end of Q3 2017 – the seventh of 13 deployment terms set out in the original consultation response – more than 200MW of unused capacity in the sub-10kW band was carried over. This was complemented by a further 44MW within the 10-50kW band and 19.7MW in the >50kW commercial rooftop band.

The unused capacity has been growing each quarter as deployment of feed-in tariff-accredited solar underwhelmed.

Since its introduction in January 2016, deployment under the reduced FiT rates has amounted to around 40MW per quarter. This has been made up of ~20MW of residential solar and intermittent deployment under the two commercial rooftop bands.

With those three caps continuing to expand, speculation has been growing as to how BEIS would manage the scheme.

This continued to grow after last week’s Budget, which included confirmation that the government would be offering no new levies to low carbon generators until 2025, but would uphold all existing commitments.

A BEIS spokesperson told Solar Power Portal: “The government will deliver on existing commitments to fund renewable energy, including for renewable electricity projects under the Feed in Tariff scheme, the Contracts for Difference scheme and bilateral contracts, such as Hinkley Point C.

“We are on track to deliver 35% of electricity from renewables by 2020-21, exceeding our ambition of 30%.”

It was also said that a decision on any potential underspend within the caps is to be taken in due course.

A review of the feed-in tariff scheme is also due to get underway. Bi-annual reviews were set out in the consultation response as a means of reconciling any issues within the overall budget.

The exact terminology within the clause states: “…this would bring together any underspend and, subject to addressing any budgetary pressures, redistribute it as deployment cap ‘top-ups’. In considering where government redistributes these ‘top-ups’, government will take into account its policy priorities. At the moment, we expect this redistributed underspend could be towards solar PV to continue supporting a trajectory towards subsidy-free deployment, as well as providing additional support to meet our earlier deployment projections.”

The Solar Trade Association last year issued its own verdict on the feed-in tariff scheme, ultimately concluding that it was “not working for the industry”. It argued that any underspend would be best served in being recycled towards commercial rooftops allowing for greater quantities of these projects to be brought forward.

This position has not changed, with the trade body suggesting that FiT reallocation coupled with action on other policy barriers - including issues surrounding EPC certificates and business rates - could ignite that particular market.