Government clarifies solar feed-in tariff rate as industry uncertainty escalates

[rondurrans]

"DECC confirms tariff rate will not fall below 21p for installations completed between 12 December 2011 and 31 March

The government has confirmed the current feed-in tariff rate for solar installations with less than 4kW capacity will not fall below the proposed 21p per kWh for all systems completed between the December 12 last year and March 31 this year."

http://www.businessgreen.com/bg/news/2139484/government-clarifies-solar-feed-tariff-rate-industry-uncertainty-escalates

[martin]

Which begs the obvious question  -"what will it drop to after that?"

[smegal]

Given how much of a state the budget for the FIT is in thanks to greedy PV capaitalists (this is a criticism of late not early adopters!), I'd be surprised if new installations received a FIT.

21p is actually a fair price. It will squeeze the less profitable installers out but that is what happens when a business relies on subsidy, they rode the wave while it was there. Diversify into solar thermal and RHI gathering tech.

[mikey9]

(this is a criticism of late not early adopters!)

(thankyou  )

Does anyone have an idea of typical 4kWp cost - I am sure I saw £8k being quoted - making a 50% reduction in 20 months - which is heading towards the language of Greg Barker late last year.....

[smegal]

The 41p (at the time) FIT rate was pretty much as fair for early adopters as the 21p rate is now when you consider the ROI.

[dhaslam]

The problem with the the scheme is the long term aspect of it.   It just wasn't  thought out very well.    For example  if you take the current lowest cost of  installation and paid it back in FITs   over four years on a  sliding scale like 40%,30%,20%,10% there would be very strong incentive to install but the overall cost of the scheme would  fall within a few years as system  costs fall.     Piling costs on to electricity bills in the distant future  when electricity  cost is likely to be higher anyway was never a good idea and the  greater numbers of installations  in the short term would also help the future energy cost if  a low  export rate is paid.            

[mikey9]

Yes - based on that kind of reduction 21p would be fair - obviously the EA's still have to pay back the EA cost so I think a reviewed price applicable a.s.a.p is not unfair - however the installers may have a different view.

[rondurrans]

My study shows that from day one the tariff was too high and therefore overcompensated investors from the outset - all the research I do indicates that the price of a PV system was over estimated by the DECC (and their consultant(s)) to what was the actual installation cost from April 2010 - therefore the proposed 5% ROR was easily achievable. The 4.5% ROR being offered by this investment now is easily achievable at 21p and now that a 4 kWp can be installed for under £8k 10%+ is still on the cards!

[mikey9]

What was the estimated figure for April 2010.....as i know what we paid! I can work out whetehr I am being over-compensated 

[rondurrans]

Have a look at page 83:-

http://www.decc.gov.uk/assets/decc/consultations/renewable%20electricity%20financial%20incentives/1_20090715135352_e_@@_relateddocelementpoyryreportonquantitativeissuesinfitsdesignfinal.pdf

[Cornish Dragon]

This is totally bizarre  ....
AND does nothing to clarify ANYTHING.....
It is certainly  a  deliberate obfuscation by "government"
If they loose ( which they should ) then they should start the
40 day "consultation " period that was a farce before and will
be a much bigger farce this time around .....!
Then on the 41st day they drop the FIT to 21p having
" listened "  to all the arguments presented.....
Which HASN'T  been helped by various trade people almost
agreeing and egging on the  cuts......  
Lets hope these suicidiiists all go bust asap when the rate
falls to 9p and no one bother with solar PV  ever again !
I wrote to the Teletubbies instead and got a coherent and
balanced rely from Noo-Noo.....
CU
CD

[rondurrans]

"In setting a 5% ROI for PV, the relatively high generation cost of PV (measured through a £/MWh13 cost-effectiveness metric) and the potential impact of this on overall scheme costs and hence energy bills has also been taken into account."

Page 9

http://www.decc.gov.uk/assets/decc/Consultations/Renewable%20Electricity%20Financial%20Incentives/2710-final-ia-feed-in-tariffs-small-scale.pdf

[mikey9]

So - the figures for April 2010 were based upon £14.4k - we paid £12k (which was the best price around at the time - and quotes ranged from £12k to £18k - so perhaps 14.4 was a good guess.....?).

I also note yield (which obviously dictates FIT payment) is averaged at 850kWh p.a. - we managed 800 so get a smaller FIT payment - so - based on those figures - we perhaps aren't being overcompensated.

[rondurrans]

mikey9 unless I am looking at a different table to you (page 83) I get your system based on their figures to be:-

(3.05 kWp * £4,500) + £2,000 = £15,725 your actual cost = £12k

my system (quotation April 2010)

(3.96 kWp * £4,500) + £2,000 =  £19,820 my actual cost £15,500
even if I use the 4 to 10 kW forecast cost of retrofit £4,800 * 3.96 = £19,008

I now have a sample of over 100 installations in the first year and they show on average an installation cost of £3,951 per kWp installed with the first twelve months average generation of 932 kWh.

[Ted]

The actual ROI being achieved is a little moot as the figures used by DECC were simply based on some research that indicated what the possible levels of take-up would be at the various ROI levels. They selected the ROI based on the desired level of take-up they wanted. This is the 'hurdle rate' in economist-speak.

If the take-up had actually been too low then they would have had to increase the tariffs, and the ROI, in order to incentivise more people to put PV on their roofs to meet the target levels. This actually happened in a small way for the Anaerobic Digestion tariff last summer. Take-up of this is still lower than DECC want so the tariff for this may increase again from April.

It is the level of take-up that should be used as an indicator of success rather than whether the predicted ROI was hit.