Rule change on system extensions (& consultation No. 2)
Changes to the rules on extensions to FITs installations came into effect on 18th October 2011
Following the Fast-Track Review, the government introduced further changes to prevent system extensions claiming the FITs registration date of the original system. See the government statement here, the consultation here, and the responses and government's conclusions here.
Again, the government ignored the majority of the responses to the consultation, and will implement the modifications virtually as originally proposed:
75% of consultation responses disagreed with the proposals
The changes take effect from 18th October 2011.
The only new aspect, following the consultation, is that there are transitional arrangements for those whose original installation has not yet received formal accreditation from Ofgem. These appear in clause 35 of the government's consultation response, and were needed because of the huge accreditation backlog at Ofgem.
This revision changed the provisions, so that extensions made within 12 months of the original installation are now treated much the same as later extensions, as follows:
- Extensions will be treated as a single new installation with its registration effective from the point of commissioning the extension.
- The tariff rate will be that which applies at the time of commissioning the extension, based on the combined capacity of the original system plus the extension.
- The tariff lifetime applicable to the extension will be reduced by the length of time between the eligibility date of the original installation and the eligibility date of the extended installation.
These changes apply to all FITs systems (not just those otherwise affected by the Fast-track review). They do not affect extensions made more than 12 months from the original installation.
The government referred to the original extension provisions as a 'loophole' which is disingenuous because, of course, they were expressly written in to the original legislation by the government (albeit for a different purpose).
Their desire to make this change was understandable, if one accepts the premise of the 'Fast-track Review' - which we do not.
The timetable for introducing the change was excessively short. This will again penalise those who have invested in good faith in the design of phased renewable energy installations.