Applications for Preliminary Accreditation submitted before December 31, 2013, will lock landowners into receiving the current higher Feed-in Tariff payment for 12 months while the turbine is installed and commissioned.
From April 1, 2014, there is expected to be a 20 per cent reduction in feed-in tariffs for smaller wind turbines up to 100kW. This is because 20MW has already been installed and as the threshold is 13.1MW, this figure has already been exceeded. As for larger scale 100kW-5MW wind turbines, 43MW has been installed so the figures are on track to hit the 73.4MW threshold. If this threshold is met then this will also lead to a 20 per cent degression rate.
Mark Newton, partner and head of renewable energy at Fisher German, said landowners should act now because there was expected to be a big rush to build wind turbines before 31st March 2014, if the project has not received Preliminary Accreditation.
“The moral of all renewable projects has been that it is imperative to get them built as soon as possible in order to lock in to the higher feed-in tariff rates,” he said.
“The longer you wait, the greater the chance of the feed-in tariff rates being reduced and the potential for the project not being so viable.
“Many landowners are trying to gain pre-accreditation before December 31 this year to guarantee receiving the existing higher feed-in tariff rates for the following 12 months, which for a 100-500kw project is 18.04p/kwh.
“But to achieve this, landowners need to have obtained planning permission and have a grid connection agreement in place.
“Twelve months might sound like a long time but for large wind turbine projects there can often be lengthy delays in getting the grid connection, securing the finance and ordering the turbine, so time is of the essence.”
Mark said if the 20 per cent degression came into effect from April 1, 2014, it is likely wind turbine projects on lower wind speed sites would not be as attractive, reducing payback from an average of seven years to ten years.
He added: “We would hope that if the feed-in tariff rates do come down, that there will be a reduction in the price of wind turbines to ensure the UK market for wind is still viable but this is not guaranteed.
“Historically as feed-in tariff payments have gone down this has been partially offset in the last three years by increases in the electricity price and we expect it will keep increasing above inflation over the next few years.
“Looking ahead to next year, if deployment in the first six months of 2014 is exceptional then further degression rates could be applied from October 1, 2014.
“But as things currently stand, we would urge landowners to seek expert advice to take financial advantage of the current higher feed-in tariff payments, before degression reduces the rates.”