1. Session ‘Effect of FiT on small hydro’ Adrian Loening Director: Mór Hydro Ltd

2. 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

3. Feed in Tariff  So far so good! Band (kW) Current generation tariffs (p/kWh) Consultation tariffs from Oct 2012 (p/kWh, 2012 prices) Final tariffs from 1 Dec 2012 (p/kWh, 2012 prices) Community energy tariff =<1521.921 >15=<10019.619.719.6 >100=<50012.1 15.5 >500=<200012.1

4. 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

5. Feed in Tariff - Degression  Predicted deployment is 16.66MW annually Degression band 2.5%5%10%20% ≤12.5MW>12.5 – 25.0MW >25.0 – 50.1MW >50.1MW

6. Feed in Tariff - Degression BHA Annual Conference, 2012  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

7. Feed in Tariff – Pre-accrediation BHA Annual Conference, Glasgow  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

8. Feed in Tariff – Pre-accreditation BHA Annual Conference, 2012  Projects must pre-accredit by 1 st Jan in any year Pre-accreditation between 1 st Jan and 31 st 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  Pre-accreditation lasts for 2 years  Pre-accreditation may be withdrawn  Decrease in capacity allowed – increase is not  Pre-accredited projects count towards degression triggers

9. Pre-accrediation BHA Annual Conference, 2012  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”

10. Is it a better FiT? BHA Annual Conference, Glasgow  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:

11. BHA Annual Conference, 2012  Year 2014 Installed capacity in year is at 22.6MW ‘Abighydro’ project 3.5 MW additional is pre-accredited before 1 st 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%

12. Example BHA Annual Conference, Glasgow  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.

13. New Questions / New Tricks? BHA Annual Conference, Glasgow  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 1 st Jan, cancel and re-pre- accredit on 31 st Dec  Both potentially adds to degression twice!

14. Old Tricks BHA Annual Conference, 2012  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

15. Now for something completely different BHA Annual Conference, Glasgow  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/www.EVA-Scotland.Org http://www.energysavingtrust.org.uk/scotland/

16. Thanks Adrian@morhydro.com