Section 3: FITs and Transition from the ROS
3.1 Microgeneration, coupled with energy efficiency, could make a significant contribution to tackling climate change. It has huge potential to deliver CO2 reductions from both heat and electricity production. It could also help to create a more diverse and secure energy supply and could reduce fuel poverty, particularly in hard-to-treat and off-gas areas as well as help to meet our very ambitious renewable energy targets.
3.2 Whilst the promotion of microgeneration is devolved to the Scottish Government, policies covering trading and regulation are reserved. With the proposed introduction of Feed-In Tariffs ( FITs) in April 2010 being led by the UK Government, it is crucial that Scottish interests are represented. We will be engaging with our key stakeholders to enable the Scottish Government to submit an informed response to the UK Government's consultation on the design and introduction of FITs.
FITS and the UKROs
3.3 The UK Government's consultation proposes the following with regard to existing and new microgenerators.
- All eligible microgenerators which have applied for and received accreditation under the RO prior to 15 July 2009 will transfer automatically from the RO to the FIT mechanism (with exceptions for microgenerators under contract to an agent and where termination of the contract would incur a penalty).
- Microgenerators which apply for accreditation under the RO between 15 July 2009 and the date upon which the FIT scheme becomes operational (the interim period) will be transferred automatically to the FIT, with their support period reduced to reflect the support already received in the form of ROCs.
- As of the date that the FIT scheme becomes operational, new microgenerators will no longer be eligible to apply for accreditation under the RO.
- Small generators between 50 kW and 5 MW in size will either remain in the RO, if already accredited, or given a one-off choice to transfer to the FIT if applying for accreditation under the RO, whether during or after the interim period.
3.4 The Scottish Government agrees that the RO does not represent the best means of support for microgenerators, despite the changes which have been made in recent years to make the legislation more amenable - including the ability to make annual claims, amalgamate output with other microgenerators and to appoint agents. The RO remains a mechanism designed to support large increases in renewables capacity, aimed at those with the resources necessary to meet the demands it imposes in terms of compliance.
3.5 A FIT mechanism, appropriately designed, can provide a simpler and more attractive incentive for small and microgenerators, and will also reduce the disproportionate administrative burden involved for both generators and Ofgem involved in accessing and providing support under the RO. The Scottish Government therefore intends, subject to this consultation outcome, to amend the ROS on the same basis as the UK - that is, to effect the automatic transfer of microgenerators to the FIT and to provide other small generators with the choice as set out above.
Metering
3.6 An issue has been raised with the Scottish Government regarding the existing provisions within the ROS regarding metering, and their effect on particular types of microgeneration. This is because the projects in question are not fitted with meters approved under Schedule 7 of the Electricity Act 1989, as required under article 18(12) of the ROS 2009.
3.7 The characteristics of these projects, that is the type of generation involved and the fact that the stations are off the electricity grid, mean that to transfer to such an approved meter could involve significant expenditure on the part of the microgenerator. It has also been put to us that such a conversion might result in losses of measured output of up to 25%.
3.8 The Scottish Government notes that the UK Government's consultation on the new FIT mechanism, to which such microgeneration stations will be transferred automatically from April 2010, makes provision specifically for off-grid generators and those using private wires. We believe that this is welcome. However, we believe that the design of the FIT needs to take a more flexible approach on the issue of installed meters as outlined above. We will be making these points to the UK Government as part of our wider response on the design and introduction of the FIT mechanism.