Session

‘Effect of FiT on small hydro’

Adrian Loening

Director: Mór Hydro Ltd

Mór Hydro

Micro Hydro development; Investor Technical Design Project Management Due Diligence

2012 Workload 3 Schemes under construction 1 Scheme refurbishment 2 Schemes in development

Developed from Carbon Trade Ltd – 20 years experience in biogas and hydro development

Feed in Tariff

So far so good!

Band (kW)Current

generation tariffs (p/kWh)

Consultation tariffs from Oct 2012 (p/kWh, 2012 prices)

Final tariffs from 1 Dec

2012 (p/kWh, 2012 prices)

Community energy tariff 

=<15 21.9 21 21 21

>15=<100 19.6 19.7 19.6 19.6

>100=<500 12.1 12.1 15.5 15.5

>500=<2000 12.1 12.1 12.1 12.1

Feed in Tariff

Degression Proposal – 5% reduction on;

April 2014 OR when capacity is 55MW April 2015 OR when capacity is 73MW

Descision Baseline degression of 5% per year from 2014 Predicted Annual Deployment Lower degression of 2.5% if less than 75% of Predicted Higher degression of 10% if greater than 150% of

Predicted Even greater degression of 20% of greater than 300% of

Predicted

Feed in Tariff - Degression

Predicted deployment is 16.66MW annually

Degression band

2.5% 5% 10% 20%

≤12.5MW >12.5 – 25.0MW

>25.0 – 50.1MW

>50.1MW

Feed in Tariff - Degression

BHA Annual Conference, 2012

When is Degression triggered? For <50kW sum of DNC Recorded on MCS Database For >50kW sum of TIC recorded on Renewables and

CHP database Note: in neither case is a project necessarily

accredited for FiTs. Early trigger also if deployment exceeds 2/3rds of

annual predicted in first 6 months of each year

Feed in Tariff – Pre-accrediation

BHA Annual Conference, Glasgow

As promised Hydro schemes can be pre-accredited for FiTs Requires;

Planning Consent CAR Licence Acceptance of a ‘Firm’ Grid connection offer

What is a ‘firm’ grid connection offer? Without transmission constraints? Paid the deposit?

Pre-accredited projects count towards degression triggers

Feed in Tariff – Pre-accreditation

BHA Annual Conference, 2012

Projects must pre-accredit by 1st Jan in any year Pre-accreditation between 1st Jan and 31st Mar are

given FiT rate for the following year (inc. any degresssion)

Do not yet know the exact process of pre-accreditation but assume ROO-FIT form minus.

Pre-accreditation lasts for 2 years Pre-accreditation may be withdrawn Decrease in capacity allowed – increase is not Pre-accredited projects count towards degression

triggers

Pre-accrediation

BHA Annual Conference, 2012

Page 108 para. 4

“Tariff lifetimes will apply from the eligibility date.”

Page 108 para. 5

“Tariff lifetimes will still apply from the installation’s commissioning date”

Is it a better FiT?

BHA Annual Conference, Glasgow

So has this made the FiT better or easier? Yes and No! More games to play! Some certainty / some confusion

Pre-accreditation triggers degression So we don’t want lots of pre-accredited projects Do cancelled pre-accredited projects ‘un-trigger’

degression?

Example:

Example:

BHA Annual Conference, 2012

Year 2014 Installed capacity in year is at 22.6MW ‘Abighydro’ project 3.5 MW additional is pre-accredited

before 1st Jan 2015 Year 2015

Tariff reduced by 10% instead of 5% A further 16MW Accredited / Pre-accredited during

year Year 2016

Tariff reduced by further 5%

Example

BHA Annual Conference, Glasgow

2016 – ‘Abighydro’ is cancelled or pre-accreditation lapses

16MW of ‘2015’ vintage hydro have lost 5% of FiT payments.

@40%load factor and £115/MWh FiT around £322K has been lost through no fault.

My guess is there will be no correction for this.

New Questions / New Tricks?

BHA Annual Conference, Glasgow

What happens if you pre-accredit in one band but final commissioned size is lower band? Cancel pre-accreditation and re-accredit – lose the

pre-accreditation benefit What happens at two year limit without

commissioning? Cancel pre-accreditation and re-apply for pre-

accreditation Better still: Pre-accredit on 1st Jan, cancel and re-pre-

accredit on 31st Dec Both potentially adds to degression twice!

Old Tricks

BHA Annual Conference, 2012

Has the new FiT band stopped down-sizing? Some projects >500kW are being downsized No projects = 100kW have been upsized?

Unless you know better!

Is the new FiT band a good thing? Broadly yes – it is what we have been asking for

Does the new FiT mechanism solve uncertainty? Not for marginal projects Not for ‘long development’ projects

Now for something completely different

BHA Annual Conference, Glasgow

Scottish Government targets for low carbon transport

Many Hydro projects are near public roads (typically at bridges)

The Energy Saving Trust will grant up to £10,000 to businesses installing Electric Vehicle Charging

Please consider applying for this. See www.EVA-Scotland.Org or

http://www.energysavingtrust.org.uk/scotland/

Thanks

Adrian@morhydro.com