The principal source of income for the Society is from the FiT Generation Tariff; it is to be paid at the accredited generation rate of 12.49p/kWh. We also sell the electricity under a PPA, initially at a rate of 5p/kWhr. The FiT rate will be adjusted on 1st April each year by the rate of inflation in the previous calendar year. REACR have fully accredited the project with OfGem and are obtaining the FiT generation rate of 12.49p/kWh (index linked) until 22nd April 2036 provided we maintain connection to the grid.
The society’s income was significantly reduced in the first year of operating by prolonged and unexpected delays by OfGem in administering the Feed in Tariff (FiT) scheme. REACR are informed that this is due to the large number of applications received by OfGem immediately prior to the Government’s amendments to the FiT scheme in 2016. Prior experience had been that the turnaround time for processing of projects, such as REACR, was a matter of only a few weeks. In this instance the processing took 11 months, during which time the society was unable to claim any FiT income associated with energy generated by the turbine– a considerable sum. During the time REACR's application was being processed, OfGem also changed the rules regarding the effective start date for FiT payments. The UK Government announced that the effective start date, for the 20 year period over which FiT payments could be claimed, would change from the date at which a project was certified as exporting to the grid (the policy in place at the time of the REACR application for preliminary accreditation), to the date at which the FiT accreditation was finally verified.
Because of this change, the society’s initial income from the FiT was be backdated only to 22nd April 2016 and not the 25th November 2015 commissioning date. These changes do not affect the long term viability or income overall, since the society will still receive FiT payments for the electricity which the turbine generates for the guaranteed 20 year period. However, the delay to the FiT commencement date affected the society’s income and cashflow in this first year of operation. Consequently, the Society has yet to pay out any members return although expects to in 2018/19 financial year.