The only surprising thing about DECC's confirmation that it will end pre-accreditation for the feed-in tariff is that 16 of the 2372 responses to the consultation were in favour of it.
Removal of pre-accreditation
In a previous update, Taking Control of the Levy Control Framework, we mentioned that, as part of DECC's drive to cut back on the escalating amount of renewable energy subsidy being paid for by consumer bills, DECC proposed to end pre-accreditation under the feed-in tariff (FIT). Pre-accreditation allowed developers to "fix" a tariff before their renewable plant was fully operational, so they got a guaranteed level of subsidy.
After a four-week consultation, which elicited 2372 responses (although many were standard responses from campaigns by environmental groups), DECC have decided to end pre-accreditation for all FIT projects, including community projects, on 30 September 2015. The Feed-in Tariff (Amendment No.2) Order 2015, laid before Parliament the same day and coming into force on 30 September, means that any project whose application for pre-accreditation is not received on or before 30 September 2015 will miss out and will receive whatever tariff (if any) is in force at the date they apply for full accreditation.
This ties in with the ongoing FIT review. DECC say that their decision to continue with the FIT scheme will be based partly around affordability criteria, including how far deployment that happens whilst the scheme is under review impacts on future available budget. Removing pre-accreditation so quickly should mean there is no large surge in applications that uses up all the budget, so the FIT scheme is given a fighting chance of continuing. That said, DECC of course reserve the right to end the FIT scheme altogether if they cannot get it to fit within the spending cap.
Is this the end?
It seems that DECC wanted to remove pre-accreditation now to prevent generators taking advantage of higher tariff levels before the FIT review (with its much lower tariffs) takes effect, likely to be January 2016. However, it may not be a permanent removal. Depending on the outcome of the FIT review, DECC may re-introduce pre-accreditation for all participants or specific groups. Although they do not explicitly mention which groups, the sense is it is most likely to be community projects. But we will have to wait and see. Either way, it will not lead to any more certainty for investors.