The Energy Act 2008 provides broad enabling powers for the introduction of feed-in tariffs (FITs) for small-scale low-carbon electricity generation, up to a maximum limit of 5 megawatts (MW) capacity - 50 kilowatts (KW) in the case of fossil fuelled CHP. The FITs will be introduced through changes to electricity distribution and supply licences.
These provisions are intended to encourage the uptake of small-scale low-carbon energy technologies while the Renewable Obligation (RO) continues to be the main support mechanism for large scale renewables deployment. Greater deployment of small-scale low-carbon technologies will:
Small-scale low-carbon electricity technologies include:
FITs will guarantee a price for a fixed period for electricity generated using small-scale low carbon technologies. This will remove uncertainty for investors, reduce the pay back period and increase the return on their investment.
We believe that the increased certainty that feed-in tariffs provide will encourage individual households, communities, businesses, schools, hospitals, universities and a host of other organisations to consider installing small-scale low carbon electricity generation technologies.
We are currently working to expand and develop evidence in order to form recommendations on the design of the mechanism, including the tariff levels and the period during which they will apply, the detail of which we will consult on in summer 2009.
Government is committed to having FITs in place in April 2010.