It has also tabled an amendment to make way for the introduction of a production-based FiT for renewable heating technologies such as solar hot-water, bio gas and micro combined heat and power (mCHP) technologies.
The amendments were published earlier this week as the Government seeks to bolster the UK economy by using FiTs to stimulate a booming microgeneration industry, thereby creating in excess of 200,000 renewable-related jobs.
The move is additionally designed to provide the UK with a realistic chance of meeting the European Renewable Energy Directive, which commits it to generating 15 per cent of its energy from renewable sources by 2020.
A House of Lords European Committee report published last week suggested that the UK energy industry would to need to undergo a radical transformation if the UK is to meet this target.
By forcing energy companies to pay premium rates to householders, businesses and communities selling green energy back to the National grid, FiTs are the procurement mechanism used by 17 European countries to encourage the installation of green energy systems.
The subsequent large-scale take-up makes renewable technologies significantly more cost effective, which in turn creates a mass microgeneration market, supporters of the financial incentive mechanism argue.
FiTs have been credited with kick-starting the renewables market in Germany, where they were pioneered, Portugal and Spain. Estimates from the National Energy Commission, Spain’s energy watchdog, suggests the country will have 2,000 megawatts of solar power capacity by the end of 2008, making it the world’s third biggest producer after Germany and the United States.
The Government has resisted their introduction in this country, preferring instead to rely on its Renewables Obligation policy to meet its EU obligations.
But with the UK facing the prospect of a deep and long recession, rising unemployment and Government public spending set to exceed its 2010-11 target by £100 billion, FiTs are seen as a viable alternative to boosting a weakening economy.
Graham Meeks, chief executive of the Combined Heat and Power Association, said: “We welcome the Government’s commitment to introducing a FiT for m-CHP and the endorsement this gives to one of the UK’s most exciting clean tech industries.
“Micro-CHP is set to take its place as a leading microgeneration technology. By offering a simple replacement for their existing boilers, it will offer many householders and businesses a straightforward and effective low carbon solution that can make a genuine contribution to cutting energy bills.”
Dave Timms, Friends of the Earth’s economics campaigner, said: “In order for businesses to think about investing in expanding production capacity, they require certainty from Government. This news should provide business with that certainty.”
A vote on the amendment is expected on November 5 when the Bill receives its third reading in the House of Lords.