Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers?

[Easi-Dec]

Hello all -

The rumour-mill is rife with regards whether the government will choose to slash FITs in 2012, with some official bodies saying it could be reduced to as little as 19p.

What does this mean for MCS installers? Are you concerned? What is the likely impact that this will have on your business?

Georgie

 

[SolarCity]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

19p?! Where on Earth have you read that?

 

[TedM]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

If payback periods go over 10 years then the industry may as well shut down as take up will be back to where it was in the LCBP and Clear Skies grant days. Remember that all the keen, early adopters are already signed up - the only remaining market is people who need extra persuasion. If 43p has failed to persuade them that PV is a good idea so far then anything much less is not going to.

Just my opinion.

And (do I even have to mention it?) this would be exactly the boom/bust cycle that the Feed-in Tariff scheme was designed to replace/prevent.

 

[SRE]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Found this, thought it was interesting - there does still seem to be support for the FiT but 5% ROI is mentioned many, many times. VIDEO: MPs clash over FITs levels for community projects

 

[Easi-Dec]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

19p?! Where on Earth have you read that?

Hiya
It has apparently been mentioned in debate, and is the amount that some of our customers and visitors are concerned about. We're concerned too! Some clear information needs to come out shortly so that small businesses know where they stand and can start planning for potential change :stuart:

 

[malcolmsanford]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

The bottom line to this is how long really in the financial climate can these payments be kept.

I hate to see any part of our industry suffer and PV, though some don't believe it, is still part of the electrical industry.

It is quite easy to keep subsidies alive in times of economical prosperity but we now don't have this. Whichever way we dress these FITs, it is not the government paying them out, or the Electrical suppliers, it is taken from everyone's utility Bills as a levy or tax.

People who are struggling with the now new term of "fuel Deficit" are beginning to realize, and understandably resent the fact that a small proportion of the country who can afford the 10k for a PV system are actually earning money off them that they themselves can not do, and have a proportional higher bill because they are subsidizing the technology.

Now even if the FITs are completely removed, I doubt that utility bills would drop, but human nature as it is the majority that don't have, are not happy with subsidizing the minority that have, and I think the government are trying to find a way out of this before it becomes a major electorial concern.

 

[Worcester]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

@Easi-Dec, ithe information is already available for anyone to plan, the detail according to their timescale it will be published in January.

This is very basic business forecasting and planning, one of three scenarious can happen, and anyone in business, especially with this level of knowledeg should easily be able to plan for them, they are:

1) A Heavy cut to all tariffs - It'll go beserk between Jan and March, with shortages of product and dissapointments all round, and a definite lull in business all round for 3 - 6 months, some companies that have all their eggs in one basket will cease trading.

2) A Heavy cut above 10k - It'll go beserk for the larger jobs between Jan and March, with shortages of product and dissapointments all round, Post April >10k may be killed off, domestic will take a small hiccough, some companies will cease trading.

3) A Modest cut all round, It'll get busy between Jan and March, with some shortages of product and a few frustrations, it'll quiten down back to normal pace (hectic!) in April.

Now, who can't plan for that?

@Easi-dec, so that you can plan for it, why don't you set up a very cost effective hire scheme? Not a Hire / Lease purchase, a proper hire and extended hire scheme with purchase options at the end. Those products that come back, you can check over and then offer out to the market at used / refurbished prices.

You continue your production, you ship more product, you get more customers, you get more exposure, this is simple buiness 101

Win-Win - Installers win, Consumers Win, You Win.

 

[Easi-Dec]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

That's useful information, thank you for sharing :stooge_curly:
With regards a hire scheme for our products; the intention of this post was to discuss FITs, and not to discuss our products (we wouldn't want to be accused of promoting ourselves, would we!). If you want to discuss our hire scheme then please email or call us.

@Easi-Dec, ithe information is already available for anyone to plan, the detail according to their timescale it will be published in January.

This is very basic business forecasting and planning, one of three scenarious can happen, and anyone in business, especially with this level of knowledeg should easily be able to plan for them, they are:

1) A Heavy cut to all tariffs - It'll go beserk between Jan and March, with shortages of product and dissapointments all round, and a definite lull in business all round for 3 - 6 months, some companies that have all their eggs in one basket will cease trading.

2) A Heavy cut above 10k - It'll go beserk for the larger jobs between Jan and March, with shortages of product and dissapointments all round, Post April >10k may be killed off, domestic will take a small hiccough, some companies will cease trading.

3) A Modest cut all round, It'll get busy between Jan and March, with some shortages of product and a few frustrations, it'll quiten down back to normal pace (hectic!) in April.

Now, who can't plan for that?

@Easi-dec, so that you can plan for it, why don't you set up a very cost effective hire scheme? Not a Hire / Lease purchase, a proper hire and extended hire scheme with purchase options at the end. Those products that come back, you can check over and then offer out to the market at used / refurbished prices.

You continue your production, you ship more product, you get more customers, you get more exposure, this is simple buiness 101

Win-Win - Installers win, Consumers Win, You Win.

 

[Noddy67]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Found this, thought it was interesting - there does still seem to be support for the FiT but 5% ROI is mentioned many, many times. VIDEO: MPs clash over FITs levels for community projects

Hey SRE - you're playing fast and loose with the word "interesting" there! If we could get a wind turbine in that room with these ministers, MP and civil servants we'd be half-way to the kyoto targets.

But yes, you're spot on that 5% gets mentioned again and again. But i also heard - when I was awoken by my head slamming on the keyboard - was (and I'm paraphrasing here) "if the costs come down by 30% then the FiT tariff should do the same". That would suggest we'd be down to around 30p.

Looking at my pricing, if we go to a 5% return we'd be looking at the 15-20p rate. but if we drop by 30% we'd be about 30p. that's a pretty big difference depending what they think the installation costs are out there.

 

[SRE]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

You need to increase your costs

 

[markfxy]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Isn't the idea of fits to compensate for the high installation costs as costs come down then fits will be reduced as we've seen in Germany. The green deal should ensure the uptake of solar PV remains at the current level with the same profits achievable

 

[TedM]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

The idea of FiTs and reducing rates is that the return for the householder remains the same at a target 5-8% - so the rates should come down in line with reduced costs.

This is subject to the government determining if the overall take-up is inline with the renewables targets. If the take up is too low then that is interpreted as meaning that 5-8% is an insufficient incentive and so rates would be increased to provide a bigger incentive. And if the take-up was above predictions then that return would be lowered and rates would go down even more than just the reduction in costs would determine.

 

[markfxy]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Can't see them increasing fits but with hefty fines in line from the EC if they don't meet targets maybe they would if takeup was too low

 

[Noddy67]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Yes I'd love to increase my prices but there's a bit of downward pressure out there from clients and competition alike.

My favourite faux negotiating stance occured just today. A client who talked about having to buy a car and a holiday for next year and therefore (woah is me) coud I knock £150 off so she could afford all three!

Like the old joke goes, "if I give you another £150 off, can you get me a car and holiday too?"

 

[TedM]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

According to this report - Solar power boom put at risk by rigid caps on budget, says industry | Environment | The Guardian - there will be no money for any new installations in 2012/13.

 

[SRE]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

OMG - what a mess! More boom and bust strategies!

 

[TedM]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Not sure yet if I agree with the findings. Have to run some figures through a spreadsheet. Will try to get time later.

 

[SolarCity]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

I was talking with my colleague about this earlier. We both agreed that a cut of 20%-30% on the FITs would see a Hell of a lot of firms winding up - that can't be a good thing. The government has made a pledge to be the greenest government ever. And they sodding need to be as well.

There is a bigger picture here and while I agree that it is unfortunate that the lowest income families will ultimately pay for it, the FIT is a necessity.

 

[MorganPVI]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

I distrust articles like this, they bang on about the FiT then start using ROC figures.

In some ways it is unfair that everyone has to pay for the FiT, but when you consider Wind Farms being paid £600K + to switch off for a day I have no effing sympathy at all, who ever is running these schemes need to get their prioties in order.

 

[Markc]

Re: Potential slash of Feed-In Tariff (FITs) - What does this mean for MCS installers

Dave Sowden, chief of the Micropower Council, the trade body for the sector. Once the renewable energy equipment has been installed, the owner is entitled to feed-in tariffs for as long as it generates electricity, unless the government changes the rules in future.


You would expect the chief of the Micropower Council (WWWWWWWWWHHHHHHHHHHHHHOOOOOOOOOOOO!!!!!) to know about the 25 year time scale wouldn't you?

Same old blar blar blar................or have I missed something?