The immediate effect of DECC's proposals regarding the future of FiTs for hydropower is not alarming and should allow hydro development to progress. However, there are long-term implications.
The FiT through the four hydro bands is only changed for pico-hydro (<15kW), which suffers from the cap applied to all renewables at 21p per kWh. The proposal is to initiate the new tariffs from October 2012 and will be fixed until April 2013. From that date onwards it is proposed there be a 5% degression per annum, unless a "trigger" level of development occurs within that year. This would bring the degression value in as soon as the trigger level is achieved (55MW in 2014 and 73MW in 2015).
This is an area which the BHA will be addressing with DECC since hydro costs increase rather than decrease over time. Other areas include the potential for pre-accreditation and a better definition of 'a hydro site'.
Finally, it is proposed that the 2-5MW band be reduced from 2013 to fall in line with DECC's plans to halve the ROC rate. This is another area we are fighting already to maintain at least the 1 ROC rate presently in place. The consultation on DECC's proposals runs until 26th April 2012