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MHA statement on Feed in Tariff review

10/1/2016

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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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17 December 2015 2015 FiT review consultation - Main decisions affecting hydropower

17/12/2015

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Ending of Preliminary Accreditation

17/9/2015

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Ofgem confirm ending of pre-accreditation and the community tariff guarantee: see open letter
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Comprehensive FiT Review (CFR)

27/8/2015

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DECC have published an 8 week consultation on their proposals to financially cap or end the Feed-in Tariff scheme altogether.  There are four papers:

The consultation
Impact assessment
Review of evidence
Cost Update (Parsons Brinkerhoff)


This consultation closes at23 October 2015 11:45pm
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Feed-in Tariffs from 1 October 2015

31/7/2015

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Ofgem have just published the table here.  This includes the latest rates subject to degression (-10% for schemes with tariff dates after 30 September 2015  compared with April 2015 rates).

Hydropower rates are shown below:
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Feed-in Tariff from 1 April 2015

30/1/2015

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Ofgem have just published the table here, or download this file.  This includes the latest rates subject to degression (-5% for schemes with tariff dates after 30/9/2014 and -15.5% for schemes with tariff dates after 31/3/2014 compared with April 2014 rates).

A retail price index uplift of 1.6% has also been applied.

Hydropower rates are shown below:
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Ofgem list of microgeneration installations to September 2014

10/10/2014

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The full list is available from Ofgem here (2 large Excel spreadsheets)

Analyses of this data for micro hydro schemes (<=100kW) recorded by Ofgem as being commissioned from 1 April 2010 to 30 September 2014 are given below. 
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MHA response to the EA consultation on abstraction reform

9/10/2014

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Please respond to the consultation here.

Below are the EA's factors relating to hydropower schemes alongside Defra's reform aims:

The EA's aims of reform are in black, the MHA's responses are in red.

• Maximise the amount of water available to abstractors; new and existing hydropower have no impact on the amount of water available to abstractors since hydropower is 100% non-consumptive 

• Promote efficient use of water through charging for actual use; new and existing hydropower have no impact on the amount of water used since hydropower is 100% non-consumptive - hydropower schemes abstract only the kinetic energy of flowing water

• Facilitate trade, maximising the economic value from available water and allowing new entrants to access water; hydropower schemes serve only to release economic value from available water with no consumption

• Provide reasonable certainty for abstractors for planning their business;  Agreed

• Protect water ecosystems in line with legal requirements, particularly ensuring that reform does not create risks of environmental deterioration; the legal requirements stem mainly from the EU Water Framework Doirective which seeks to protect and improve the status of Water Bodies.  The majority of low impact small scale hydropower schemes have no or insignificant impact on Water Bodies as defined by the Water Framework Directive so should not be made subject to the constraints imposed by the WFD or related legislation.

• Ensure the new system is able to respond to longer-term changes in water availability.  Hydropower has no long term impact on water availability as no water is made unavailable.
We want to do this in a way that minimises the administrative costs whilst still achieving our aims. This is about smarter regulation that reduces the cost to businesses of dealing with the challenges of the future. We also want to make sure we move to a new system in a way that takes into account both current licensed volumes and the amount that abstractors actually take.
A registration process will considerably reduce the costs of licensing hydropower abstraction.
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Ofgem list of microgeneration installations to April 2014

11/4/2014

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The full list is available from Ofgem here (2 large Excel spreadsheets)

Analyses of this data for micro hydro schemes (<=100kW) recorded by Ofgem as being commissioned from 1 April 2010 to 31 March 2014 are given below. 

(NOTE there are no entries by Ofgem for any schemes installed since 31 December 2013 and there have been many new entries for schemes commissioned in 2012 but not previously reported by Ofgem)
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EA's new hydropower guidance goes live and EA's website transfers

3/4/2014

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In addition to the new hydropower guidance going live for all new applications received, the EA's website is transferring to www.gov.uk. You’ll find the  new EA guidance here, and the application forms are still found on the Environment Agency pages here.

Please find attached a briefing note on the Environment Agency’s website moving to join www.gov.uk.
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