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The final years of FiT accreditation

7th December 2017
The final years of FiT accreditation

The Autumn Budget 2017, published on 22 November, implied that the Feed-in Tariff (FiT) will close to new accreditations at the end of March 2019. This comes amid plummeting accreditation figures and falling costs.

The FiT is a support mechanism incentivising the uptake of <5MW renewables. The scheme has grown rapidly since its introduction in April 2010 and has seen households and businesses collectively become very large investors in renewable energy in Great Britain. As of 30 November 2017, there was 5,868MW across 808,051 installations accredited to the scheme. A supporting document to the Autumn Budget, “Control for Low Carbon Levies”, suggested the scheme will close to new accreditations at the end of March 2019.

Our Q417 forecast revealed that new installation numbers remained low in Q317 relative to previous years. 90MW was accredited in Q317, the lowest in any quarter since Q211. This capacity accredited across 5,662 installations, the fewest in any quarter since Q210, the first quarter of the FiT scheme. The fall in new accreditation is such that many technology types now fall under the quarterly deployment caps set by BEIS.

The caps effectively force new applicants to "queue for entry" onto the FiT scheme as each month’s cap is reached. A backlog was created after the caps were introduced, later resulting in a delayed reduction in new accreditation and capacity figures as older accreditations were still being processed. These artificially high numbers would only last until the backlog was cleared, which appeared to have begun in Q217.

Early signs seem to indicate that the number of new FiT accreditations has further plummeted in Q417, with only 20 solar PV installations accredited across the first two months of the quarter (October 2017 and November 2017). For comparison our September Monthly Update reported 2,116 new solar PV installations for that month alone. Solar PV technology dominates the scheme, and makes up 98.8% of total installations. However in October hydropower had more accreditations than any other tech type for the first time ever, reflecting this significant drop.  

Looking ahead annual FiT costs for the year 2017-18 are expected to fall compared to our Q317 forecast due to lower-than-expected outturn costs for July to September 2017. Electricity demand has dropped 2.0% in the first half of 2017-18 (April – September), compared to the equivalent period in the previous year. We have reflected this in lower demand forecasts, which have had a small upward influence on per unit costs.

While the apparent closure of the scheme in 2019 will mean no capacity-related increases in scheme costs beyond this point, we do not expect the first projects to stop receiving subsidy until 2030, as the majority of projects have received 20 years’ of support under the scheme.

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