The government announced new budget-cautious measures yesterday for yet another energy funding mechanism. After the Supreme Court announcement on Friday last week it is clear that the budget for FiT's will be exceeded by a large amount. In light of this, the Government has released a consultation on digression mechanisms and measures for a potential suspension of the RHI should its own 'cups' look threatened. These are drastic measures but the Government are being cautious in light of the FiT episode.

The suspension would act on a financial year and reopen with calibrated tariffs. This would only affect new applications and installations which are already being funded will continue to be so. The consultation proposes to introduce a trigger which would set off a suspension with a predetermined notice period. The notice periods on consultation will cause concern to many developers as the shortest period under consultation is "no notice" and the Government are relying on vigilant developers keeping an eye on the published figures. These measures may benefit developers and consultants like Savills Energy who have been watching the FiT figures with trepidation for over six months.

Miles adds "these measures seem sensible though given the comparatively long lead-in times for qualifying projects such short notice periods seem a little draconian; the more complex processes involved in heat projects mean that most qualifying installations are not "plug and play". As a consequence, take up is likely to pose much less of a budgetary challenge than solar so whilst it sounds like a fairly uncomfortable set of consultation questions, the balance of probability will likely fall more lightly than we might fear."

This consultation will close on the 23rd April, with a longer-term flexible digression-based mechanism to be consulted on over the summer. This will cover the recalibration of tariffs for the re-opening of the RHI in the event of a suspension. Developers and investors alike will be keeping an eye on this.

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FOR FURTHER INFORMATION PLEASE CONTACT:

Miles Thomas, Head of Operations Savills Energy, mthomas@savills.com  07807 999 128

Davina Bell, Savills Energy PR Manager, dcbell@savills.com  07807 999 244

Notes to Editors:

• Savills Energy is a dedicated real estate service created to specifically assist the inception, planning, development and continued operation of assets and infrastructure connected to the energy production and storage sector.
• Savills is an international real estate adviser listed on the London Stock Exchange. Established in 1855, Savills has a rich heritage with unrivalled growth. It is a company that leads rather than follows, and now has over 200 offices and associates throughout the Americas, Europe, Asia Pacific, Africa and the Middle East www.savills.co.uk and www.savills.com