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Session ‘ Effect of FiT on small hydro ’ Adrian Loening Director: M ór Hydro Ltd. M ór Hydro. Micro Hydro development; Investor Technical Design Project Management Due Diligence 2012 Workload 3 Schemes under construction 1 Scheme refurbishment 2 Schemes in development
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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!
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
Feed in Tariff - Degression • 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 BHA Annual Conference, 2012
Feed in Tariff – Pre-accrediation • 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 BHA Annual Conference, Glasgow
Feed in Tariff – Pre-accreditation • 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 • Pre-accreditation lasts for 2 years • Pre-accreditation may be withdrawn • Decrease in capacity allowed – increase is not • Pre-accredited projects count towards degression triggers BHA Annual Conference, 2012
Pre-accrediation • 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” BHA Annual Conference, 2012
Is it a better FiT? • 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: BHA Annual Conference, Glasgow
Example: • 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% BHA Annual Conference, 2012
Example • 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. BHA Annual Conference, Glasgow
New Questions / New Tricks? • 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! BHA Annual Conference, Glasgow
Old Tricks • 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 BHA Annual Conference, 2012
Now for something completely different • 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/ BHA Annual Conference, Glasgow
Thanks Adrian@morhydro.com