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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:
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Ofgem confirm ending of pre-accreditation and the community tariff guarantee: see open letter
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 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:  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:  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. 
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. 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)     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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