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MICRO GENERATION FEED IN TARIFF TO BE CUT

Energy Minister Greg Barker has confirmed to industry sources that the budget for Feed-in Tariffs (FiTs) will be cut by 10 per cent in 2014-15. So the amount available annualy for FiTs will fall from £400m currently to £360m as a result of the recent Comprehensive Spending Review.

He stated that this was an absolute cap set by the Treasury. This has alarmed many members of the microgeneration sector as they fear investors may be scared off by the uncertainty about long-term funding and, therefore, the potential return on their investment.

Mr Barker has also expressed concern that so-called 'solar farms' could swallow up a disproportionate amount of the funding. These greenfield developments are springing up as investors seek to take advantage of the tariffs by producing electricity using photovoltaic (PV) panels and selling it to the National Grid.

Mr Barker told a recent meeting of interested industry parties that the previous government had failed to take into account the potential impact of these 'farms'. He said that the intention of FiTs was to "spread the word" about renewables and benefit small domestic microgenerators not generate profits for "investors and speculators" through a relatively small number of large scale projects.

He said it would be a "travesty" if solar farms diverted funding away from the real target audience and he would intervene if there was a marked increase in their numbers. However, he said currently they were not a cause for alarm and the situation would remain under review. He also promised there would be no retrospective changes to the scheme that might harm prospects for certain technologies.

As well as PV, the tariff scheme is designed to stimulate investment in wind and hydro power; anaerobic digestion and domestic scale combined heat and power (CHP). Biomass projects receive support under the Renewables Obligation (RO) funding provided by energy utilities.