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MHA statement on Feed in Tariff review

10/1/2016

The Impact of Feed in Tariff Review on Micro Hydro-electric Projects

The Micro Hydro Association (MHA) is shocked by the totally unexpected reduction in FIT for smaller schemes, especially for <100 kW installations. The MHA cannot compute how the new tariffs will yield a 9.2% financial return on investment, as stated by DECC. The proposed FIT will not allow hydro development to be financially viable. The collapse in base price of electricity and the complexity of direct supply does not allow ‘Renewable, no carbon electricity’ to be priced at its worth, leaving the FIT as the only mechanism through which hydro can currently be brought to market. Without a reasonable FIT this industry cannot survive. This will result in the loss of potential sustainable no carbon electricity together with the loss of a highly skilled nascent workforce and valuable working knowledge.
In light of the COP21, the MHA is dismayed that the Government are essentially withdrawing support for the Hydro industry. Hydro-electricity schemes can operate for up to 100years. Given this longevity, start-of-life financial support offers better whole life value for money than any other form of energy generation.
There are still hundreds of potential hydro sites and weirs around the British Isles which could provide sustainable energy and continue our long tradition of harnessing the power of water, but with the reduction in FIT for hydro, these Micro hydro projects will now be un-viable.
DECC’s underpinning reasons for tariff cuts:

Affordability for consumers:– The cost of the FIT is £7/person per year. According to the IMF UK citizens pay £400 pa for fossil fuel subsidies. Hinckley point will receive £92.50/MWh in subsidy, considerably more than hydro, yet in addition, there will be significant clean-up costs.Hydropower schemes run for longer than any nuclear plant and have no toxic legacy.
LCF over spent:– DECC have not answered questions on how this calculation was made and the actual contribution of the FIT to this assertion.
Renewable energy becoming subsidy free:– PV in southern England is approaching subsidy-free potential. Hydro installations are larger infrastructure projects, although unlike gas-fired or nuclear generators, hydro can operate waste and emissions free for 100 years - if nuclear, gas-fired, even diesel standby generators are worth a subsidy or tax relief, then surely hydro is worth the investment?
Assertion from DECC in consultation that UK on track to meet EU emissions targets: – an internal letter from Amber Rudd has suggested that DECC know they are likely to miss targets.

Requirements:

The reinstatement of FIT rates for Hydropower (<500kW) extant before the opening of the FIT consultation in August 2015.

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MHA statement on Feed in Tariff review

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