Energy incentives set to FIT the bill for businesses | 15 April 10

COMPANIES are being given major incentives to start generating their own energy from renewable sources.

The introduction of “feed-in tariffs” in April effectively hands businesses and householders large subsidies for smaller scale renewable energy developments.

Environment experts from law firm Ward Hadaway say that the move will make projects such as solar panels, wind turbines and small hydro-electric schemes much more financially viable – and may open up new revenue streams.

Stephen Campbell

Stephen Campbell (pictured), partner and head of environment at Ward Hadaway, said: “Until recently, most companies which developed their own energy from renewable sources tended to be larger businesses such as Nissan which could afford to invest in the infrastructure needed to make such projects stack up financially.

“However, the introduction of FITs opens up that possibility to a much wider range of businesses, as well as individual households.

“The Government hopes the incentives will prove strong enough to see up to a million solar panels and over 30,000 small wind turbines installed over the next ten years.”

Feed-in tariffs are paid to the owners of renewable energy projects which generate less than 5 megawatts of power.

Unlike another renewable energy initiative, ROCs (renewables obligation certificates), FITs payments will be for a guaranteed amount for every kilowatthour of electricity generated.

The payments will also be index-linked and guaranteed for 20 years, or 25 years in the case of solar panels.

Mr Campbell explained: “Whilst these payments will, of course, be welcomed, businesses can also use the electricity they produce via their renewable energy scheme to reduce the amount which they have to buy in from the grid.

“What makes this doubly attractive is that any excess power the project produces can be sold back to the grid at a premium price.”

However, not all renewable energy projects will qualify for FITs. Existing schemes that were commissioned before 15 July 2009 will not be eligible for FITs.

For Renewables Obligation-accredited schemes that were commissioned on or after 15 July 2009 but before 1 April 2010, owners only have until the end of August this year to transfer those schemes to Feed-In Tariffs.

For new schemes to be eligible for FITs, they have to be either fully accredited by the Microgeneration Certification Scheme for schemes generating under 50 kilowatts or be registered through the so-called ROO-FIT process (an update of the Renewables Obligation process) for projects generating between 50 kilowatts and five megawatts.

Stephen Campbell said: “Whilst there is a range of other considerations which companies need to take into account when planning potential renewable energy schemes, these new incentives seem certain to make many businesses consider projects which could benefit their bottom lines, as well as helping the environment.”

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