DECC have announced the final FiT levels in advance of the incentive coming in in April. Having had a number of disheartening conversations with policy makers over the last few months, the FiT levels are no surprise. No one in government seemed to mind that the FiT would be a subsidy for middle class greenies and folks like McAlpines. The important thing was that the FiT wouldn’t cost too much.
Conspicuously absent: small scale CHP. Originally they’d proposed to include CHP below 50kW but now they’re saying only sub 2kW will be eligible and even then only the first 30k installations. The sub 2kW appears to be a gesture to British Gas and other big investors into household CHP. The lack of incentive for engines up to 50kW looks like a slap in the face to the CHPA.
But forget the FiT – here comes the RHI. The RHI consultation launches today but they’ve already published the starting figures. And holy smokes it’s chunky! 18p/kWh for small solar thermal. 9p for biomass under 45kW! Expect a scrum forming around biomass fuel suppliers.
This level of RHI could be a meaningful change. While there are still some important changes that need to be made (e.g. incentivising the distribution of heat, not just generation; applying the RHI to waste heat from power stations; etc) this is a good starting point.
carbon limited 
In your considered opinion, would it be advisable to start up a pellet company?
They dont look that bad actually- 36p is on a par with Germany. The degression in Yr3 seems high, though. The AD figure is poor, which I think is a shame.
I did have something intelligent to add but then I saw auto-generated related links for this post and got sidetracked.
It is right that the RHI is more generous than FITs. We could take that money being spent on FITs and spend it on wind farms and we would get many more units of more sustainable electricity for the same investment. For heat there is no such centralised alternative, and so the RHI policy will make a much more meaningful contribution to decarbonisation.
I totally agree that there remains a policy gap around CHP and heat from power stations or industrial processes, but I’m not convinced the FIT was ever the right way to address that one.
Not sure why you deride the FiT as an ineffective mechanism for promoting renewable electricity. Carbon Trust reckon it’s the most effective (and the RO is the least effective). What’s your rationale for claiming it’s better to spend the FiT money directly on wind farms?
I’m not deriding the FiT as a mechanism. I’m saying that we should not support very expensive technologies at any cost when we have cheaper and equally effective alternatives (possibly more effective when you look at the return on energy/carbon invested). In fact if the Carbon Trust are right and a FiT reduced the cost of support for large renewables by 20% then that would only strengthen the argument.
Don’t get me wrong I do think microgen should be supported. However we have to be honest about the benefits, which are consumer engagement and avoided grid reinforcement. The subsidies proposed for PV are already over 8 times those for onshore wind – how much are the benefits worth?
The microgen industry will say that the overall costs of the FiT scheme are modest, which is true. It is worth noting that increasing the rate paid for a technology increases costs twice, once on each unit and once for the extra uptake that will be encouraged. Simplistically if doubling the FiT rate doubles uptake then the overall cost quadruples.
The grid can be decarbonised without microgeneration (although it might not be desirable to do so) – heat cannot. So while I don’t think the RHI should be a blank cheque either if I was going to throw money at something it would be the RHI before the FiT.