DP Energy Small Scale Wind Renewable Development

Helping Landowners to diversify their income and reduce energy costs by on site generation of clean sustainable wind power.

The UK Feed in Tariff

On the 1st of April 2010, a feed-in tariff (FIT) system was introduced in England, Scotland and Wales (but not currently in Northern Ireland) as part of the UK Government’s effort to increase the amount of electricity generated from renewable resources. The UK may need to generate up to 40% of its electricity from renewable sources by 2020 if it is to meet EU targets – a tenfold increase on current levels over the next decade. The majority of the target is expected to be met by more cost-effective large scale renewable electricity generation.

The Government, however, has set a target for 2% of electricity to be produced from small scale generation by 2020. Beyond 2020, this is expected to become an even more important component of the energy mix.

The existing incentive mechanism, the Renewables Obligation (RO), is designed to support large scale renewable generation but was considered unsuitable for encouraging smaller scale projects.

FITs were introduced to focus specifically for small scale generation as fixed feed in tariff power purchase agreements provide the certainty of a viable and ascertainable revenue stream which enables small generators to obtain finance to build their projects Onshore wind developments with capacities of less than 5 megawatts are eligible under the scheme.

The FITs provide generators with two elements of payment: a generation tariff and an export tariff. The generation tariff is a fixed amount paid for every unit of electricity produced. In addition to this generators receive another payment for each unit of electricity which is exported to the grid rather than used on the premises. The export tariff is lower than the retail price of electricity so it makes sense to use the electricity onsite rather than to export it. In this way sites with larger electrical demand will benefit most.