Finance, Tariff and Reform

Green Finance, the Export Tariff, and Reform of Power System Governance


In May, the Commons Environmental Audit Committee said that falling investment in renewable energy projects over the last two years threatens Britain’s ability to meet its legally binding carbon targets.
The 6th report of the Commons Select Committee on Environmental Audit, published 16 May 2018, is entitled “Green finance: mobilising investment in clean energy and sustainable development”.
In its summary, it notes that despite achievements in some areas “there are worrying signs that investment may have stalled in the last two years,” threatening the UK’s ability to meet its fourth (2023–2027) and fifth (2028–2032) carbon budgets … “Recent figures show that clean energy investment has fallen dramatically since 2015. In cash terms it fell by 10% in 2016 and by a further 56% in 2017. Annual clean energy investment in the UK is now the lowest it has been since 2008 and the rate at which we are installing new renewable capacity is slowing.”
The report is available at https://publications.parliament.uk/pa/cm201719/cmselect/cmenvaud/617/61702.htm

Despite the view of the Environmental Audit Committee, the UK government intends to close the remaining tariffs supporting renewable generation. In its report of 19 July 2018, “Consultation on the Feed-in Tariffs scheme”, BEIS (the Department for Business, Energy and Industrial Strategy) stated that the “government is proposing to close Green finance at the same time as the generation tariff. This would mean that no new applications for accreditation would be accepted after 31 March 2019, subject to the exceptions set out in paragraph 1.11.” (Executive Summary, Part A: Closure arrangements, section 9).
The report is available at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/726977/FITs_closure_condoc_-_Final_version.pdf

Not surprisingly, Regen disagrees with the proposal to end the export tariff alongside the generation tariff, believing  that “the Feed-in Tariff (FIT) has provided the basis for growth to the sector and has had a positive effect on the overall UK economy through increased investment and job creation.” Regen goes on to “provide evidence of the positive impacts of the FIT, the negative impacts of its closure and the feasibility of an alternative solution.”
This evidence and details of a proposed alternative solution are given in Regen’s paper available at
https://www.regen.co.uk/wp-content/uploads/Feed-in-Tariff-Closure_Regen-response_for-website.pdf

An accessible background to the current changes and reforms is provided in a recent paper by Andrew C. Wright, of the Office of Gas and Electricity Markets (OFGEM) entitled “Reform of power system governance in the context of system change”, published in IET Smart Grid (Volume: 1 , Issue: 1 , 4 2018 ) and available on open access, e.g. at https://ieeexplore.ieee.org/abstract/document/8353128/metrics#metrics

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