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Farewell to FiT

A key incentive to invest in renewable energy projects has ended. John Pullen and Gareth Taylor explore the legacy of the Feed-in Tariff and ask what does wind look like in a post-FiT world?

The legacy: 850,000 installations and 6GW of generating capacity

For nearly a decade the UK Feed-in tariff (FiT) provided an incentive to construct small-scale renewable energy generating schemes. Following its closure to new entrants on 1 April 2019, now is the time to review how it changed the UK electricity network and ask: did the UK ‘get FiT’?

FiT was established in 2010 as a Government incentive to invest in renewable-energy technologies. The scheme gave a guaranteed price for electricity generated, based on a scheme’s generation capacity, with a further export payment for electricity supplied to the grid.

The rate of subsidy depended on the technology used. By the end of the scheme, more than 850,000 installations had been accredited and more than 6GW of generating capacity added to the network at a local level.

By capacity, the vast majority (80%) of the installations were solar PV, with wind (12%), hydro (5%) and anaerobic digestion (3%) accounting for the remainder. Not surprisingly, with solar taking the lion’s share, England (80%) followed by Scotland (13%) and Wales (7%) had the greatest contribution. Combined with large scale projects, renewable energy now accounts for a third of UK electricity generation, up from around 5% when the FiT was introduced in 2010. 

With nuclear energy holding steady at nearly 20% of generating capacity, fossil fuel generation has fallen from around 75% to less than 50% over the same period. By the end of the decade, renewable sources are likely to overtake fossil fuel for annual electricity generation. There are now many digital apps that will show how each generation type contributes to the energy mix and anyone can see what technology is providing their electricity in read-outs that are accurate to the half-hour. Coupled with the simultaneous advance of smart meters, consumers are more aware than ever of how they are then using that power.

Just less than 5GW of solar PV panels were installed under FiT. As these operate only during daylight hours, there may be those that argue that they have done little to contribute towards the daily demand of around 40GW. However, the 800,000 properties on which they have been installed are now acutely aware of their individual generation and consumption balance. Those houses and schools will contain the engineers, policy makers and house builders of the future. If the FiT accomplished anything, it helped to achieve a much greater understanding of how electricity is actually generated and consumed and for that alone, it was certainly a success.

Wind: Making the sums work without subsidies

The support mechanisms for evolving renewable technologies were designed to diminish over time as the costs of production fell and technological improvements occurred. But with the FiT closing for new projects it’s appropriate to ask: does wind remain economically viable in a subsidy-free world?

Wind is the most productive renewable energy technology in Scotland, comprising 7.8GW from onshore schemes in 2018 (71% of total renewables) and 628MW from offshore generators. Boosted by high average wind speeds, Scotland produces 59% of its electricity from renewables and is on target to reach 100% by 2020, with most of it likely to come from wind power.

The lowest fruit was picked first and many schemes reduced their capacity to maximise income from FiT. The majority of unbuilt projects tend to be those with more complexities and constraints or waiting for grid capacity. However, as wind – and turbines – have become the norm, some schemes are becoming viable (and likely to gain consent) if re-worked to have fewer but larger and more powerful turbines. Although the grid connection cost remains unaltered, this can significantly reduce infrastructure expenses.

Even here, some developers are exploring the possibility of constructing, owning and operating their own grid connection.  Technology is making some installations more efficient. As we reported in Energy Matters issue 17, extending a turbine rotor blade can increase production by up to 7% with a payback period of one to three years, using existing infrastructure and with minimal environmental impact.

The industry has seen a contraction in the number of medium-sized developers as bigger players acquire the expertise and capital required to unlock prospective sites. And developers who are innovative in their approach are making complex schemes work. Galbraith is currently involved in schemes with developers who are both collaborating with multiple stakeholders to secure rights and using other developers’ existing infrastructure and access tracks.

Developers are also negotiating harder for access and land rights – another indication of cost cutting. While they are still looking to put new sites under option, developers are budgeting to rent at about half what they were offering under the FiT scheme.

Meanwhile, the first generation of turbines is nearing the end of its lifespan or planning consent, and some developers are in the early stages of ‘repowering’ sites, taking advantage of the improved generating capacity of turbines which have evolved over the past 20 years.   In a post-FiT world, investment in wind will continue, but the sums must add up, schemes will have to be more carefully designed and the public will have to get used to bigger turbines.