The degression factors used for calculating future tariffs
This all changed with effect from 2016 – see here.
The principles adopted to calculate future tariff reductions have evolved from the simple annual percentage in the original legislation.
There are now three elements taken into account.
Pre-planned degression – the default
This is the simple regular percentage reduction, as originally proposed.
Following the Comprehensive Review, the frequency of degression is different for different technologies:
Default degression parameters
| Technology | Frequency | Effective on | Default degression | from review |
|---|---|---|---|---|
| Solar PV | Quarterly | 1st Feb, May, Aug, Dec until July 2013[1] then: 1st Jan, Apr, Jul, Nov |
3.5% | Phase 2A |
| AD biogas Hydro Wind |
Yearly | 1st April | 5% | Phase 2B |
| Micro-CHP Transfers from RO Export tariffs |
None | 0% |
[1] This caused some confusion and is further explained here.
However the level and the timing may be adjusted depending on the levels of deployment:-
Contingent degression
This element allows the degression rates or timing to be adjusted depending on the actual levels of deployment under the FITs.
The government has set a range for expected deployment for various technology bands, as further detailed . If deployment is lower than expected, degression can be reduced or avoided altogether. If deployment exceeds the default ‘corridor’, the degression level is increased. There are multiple corridors for such ‘over-achievement’ with increasingly sharp degression adjustments.
All the deployment corridors are given here together with the degression rates applicable to each. The actual degression applied in each period is given here.
To help give early warning on the level of deployment (and therefore when triggers might be reached) a preliminary accreditation regime has been introduced for some technology bands.
For solar PV systems
The degression can be skipped for up to two consecutive periods if deployment is low.
The percentage can be doubled, and redoubled (up to a maximum of 28%) if deployment is high.
For other technologies
Degression would be halved if deployment is low, and higher levels are set if deployment is high.
Under extreme circumstances an extra degression step could be introduced at the half-year point.
Annual tariff reviews
Finally the government may review any tariff levels on an annual basis to ensure that they are achieving the desired outcomes.