Twiiter @DECCgovuk live with Greg Barker

[Worcester]

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[TD="width: 689, bgcolor: #ccff00"] WorcsRenewables Worcester Renewables
@DECCgovuk There are lots of rumours of massive cuts to the Feed in Tariff for Solar PV in April 2012, what are your plans?
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[TD="width: 689, bgcolor: #ccff00"] WorcsRenewables Worcester Renewables
@DECCgovuk #AskEnergy What is the current timescale for the FiTs Strategic Review?
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[TD="width: 689, bgcolor: #ccff00"] WorcsRenewables Worcester Renewables
@DECCgovuk #AskEnergy rumours abound that the FiTs review is late and that another drop in Feed-in Tariffs will b annouced before Xmas True?
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[TD="width: 689, bgcolor: #ffffcc"] DECCgovuk DECC
clearly big scope to realign tariff with cost, the more we save the more there will be to spread further. i want max takeup 4 money & TLC
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[TD="width: 689, bgcolor: #ffffcc"] DECCgovuk DECC
And by TLC i mean Transparency, Longevity & Certainty for consumers and industry
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[TD="width: 689, bgcolor: #ccff00"] WorcsRenewables Worcester Renewables
@DECCgovuk does that mean FiT rates may change mid year with short notice? #AskEnergy
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[TD="width: 689, bgcolor: #ffffcc"] DECCgovuk DECC
Massive fall in solar costs & big take up is good news but FITs need to be more dynamic to track industry. Comprehensive Review out shortly

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Looks like big chnages ahead to me...

"Big Scope" "Dynamic" ...

 

[SolarCity]

If anything occurs that is 'dynamic' then it will seriously harm the industry.

 

[Worcester]

I agree, I think we are in for a seriously turbulent 6 - 9 months.

 

[SolarCity]

I seriously wonder how much thought goes into these kind of things. If anything happens before the end of the March then you'll end up with the biggest boom/bust scenario imaginable:

The whole industry will go crash, bang, whallop and homeowners will end up with shoddily installed systems, with 10 year warranties with companies that go bankrupt by June.

The prices of systems have come down - this is a good thing. The wrong way to look at it would be to say "Great, we don't have to pay as much FITs anymore, lets knock the FIT to 35p at Xmas." as this will create just the kind of scenario that I suggest above. The right thing would be to say "Great, the systems are coming down in price. This won't cost us any more than we originally anticipated, it will simply mean that uptake in the industry will be quicker. Lets give the industry 12 months breathing space and announce the FIT reduction for April 2013 in April 2012."

 

[TedM]

'dynamic' and 'certainty' - with FiTs you can have one or the other but not both.

 

[SRE]

Solar portal is quoting 19th october for review being published and 30 - 50% cuts in Fit :89:

 

[SolarCity]

Was this the article you were referring to?

The new FiT, prices and the future for solar in the UK: Part 1 - Solar Power Portal

What a disaster.

 

[SRE]

Yep, we've booked for a 2 week hol in mid november since Feb ( we thought it would be quiet) I'm seriously considering postponing it .....

 

[SolarCity]

I suppose I'll be cancelling my trip to watch Bruges vs. Birmingham also.

 

[SRE]

Anyone worked out how to commission in the dark???

 

[SolarCity]

Anyone like to speculate when the changes could come into force?

 

[SRE]

January 2012, they can't possibly implement it before then.

 

[SolarCity]

You wouldn't think so. But they are showing themselves to be reckless to say the least. I wonder how many firms will pack it all in?

 

[Worcester]

40 days consultation remember, however the House of Lords could throw it out, then he'd have to come back with another..

 

[SRE]

14th December - implement it in January/February once the lip service has been paid ??

 

[TedM]

I believe that if it is simply to be a change to the tariffs then the House of Lords would not be involved as there is no need to change any legislation - just an update to the Standard Conditions which are simply signed off by the Minister of State at DECC.

I think that even a public consultation period would be optional if DECC declared that the changes were needed in extremis to comply with EU regs.

 

[MorganPVI]

At the end of the day the DECC have run the figures and decided there is no more money in the pot and they're damned if they are going ask for or allocate new money. They've also run the payback figures and discovered the returns of PV are too high and as FiT is too generous, the only way to discourage people signing up, balance the books in the current state and open to keep the scheme new entrants is by limiting demand. Therefore expect the FiT to be slashed.

If you run the numbers then a cut to 30p would be about the best possbile outcome, personally I think it could go to 25p.

 

[UK PV Systems]

I was always under the impression that there was not actually a 'pot' of money. I thought the FITs were coming from the little charge to everyones energy bill. hence why energy providers pay the customers??

if there is a fund then the government needs to seriously consider its options and not take drastic cutting measures just because how successful uptake has been. A better method would be to cut the FIT down year on year starting from March as previously set out, but be more dynamic compared with uptake in that year and system cost. that way ROI etc and payback will stay fair.

or

First come first served kind of thing for example batch of 1MW at highest FIT then next batch 1MW installs will qualify for next band of FIT etc etc...

Green Deal will fall flat on its face before its even begun due to customer and industry perception, if they slash the FIT too much.

 

[TedM]

Whilst the cash for FiTs does come from a small levy on all electricity customers, the budget for the total amount is controlled by DECC under strict HM Treasury rules (explained here - http://hm-treasury.gov.uk/d/control_framework_decc250311.pdf )

The announced budget figures for FiTs were in the DECC fast track review consultation document - http://www.decc.gov.uk/assets/decc/...ts-fast-track-government-response---final.pdf - bottom of page 4.

The total spend allowed for 2011/12 is £80 million and £161 million for 2012/13.

 

[Graeme Harrold]

Reading this Im glad Im an electrician first and not relying on installs......not good reading

 

[nbown]

I'm i correct to understand that this is only for new installs?

 

[SolarCity]

That's right. Current installs will be locked in at the current rate.

Installs carried out between September and the end of December will be considered the golden bunch of PV installs. Houses with these systems on their roofs will be worth much more when they come to sell, I'd imagine.

 

[nbown]

That's right. Current installs will be locked in at the current rate.

Installs carried out between September and the end of December will be considered the golden bunch of PV installs. Houses with these systems on their roofs will be worth much more when they come to sell, I'd imagine.

just got mine done on Saturday 3.92kw so I'm in the golden bunch now:ciappa:

 

[Graeme Harrold]

Run the figures on a system with a 25p FIT, and the prices will be driven down a bit off of the back of any changes. I dont think solar wholesale can go down much further, but I dont think the cuts proposed are total gloom and doom as first thought.........

 

[SolarCity]

We've run all sorts of scenarios through our software. A 25p FIT will be an utter disaster. Just who is going to go for that rate when they can have it done now at such a higher rate? We think that a huge hike in electricity prices is the only thing that will save the industry. 2012? A write off.

 

[furrypants]

I've worked out that a £11k system @ 25p (4kw) would have a break even point at 9.5 yrs instead of 43p @ 6.5 yrs.

I think the goverment will look that people are getting systems installed for £8k so pay back at 25p would be 7yrs. It's the cheap nasty install systems that are going to ruin the FIT payments.

 

[TedM]

Some more food for thought.

In the original FiTs consultation documents there is included an analysis of the then (early 2009) PV installation costs and it is upon those figures that the current FiT rates are based. They also included a prediction of possible future costs.

The figures there are broken down, but I'll summarise them here.

2009 costs:
2.5 kWp retrofit - £13,250
4.0 kWp retrofit - £19,200
10.0 kWp retrofit - £43,000

Plus £1,000 every 15 years to allow for inverter replacement.

2015 predicted costs
2.5 kWp retrofit - £8,325
4.0 kWp retrofit - £10,796
10.0 kWp retrofit - £24,200

Those 2009 costs led to an initial tariff of 41.3p being set for <4kW retrofit systems in 2010 and a predicted rate in 2015 of 28.8p (for Year 6) and this was based on a likely production figure of 850 kWh per kWp per year.

So, looking at just a 4kW system and ignoring export and import offset to keep things simple:

2010 - 4kWp generates 3400 kWh at 41.3p - pays £1,404 against cost of £19,200 = breakeven 13.7 years
2015 - 4kWp generates 3400 kWh at 28.8p - pays £979 against cost of £10,796 = breakeven 11.0 years

So a possible rate for 2012 could be set at maybe 12 years breakeven against a 4kW system cost of currently around £13,000 which would give £1083 per year at a rate of 31.8p

Of course, apart from simple maths, political issues come in to play as well. Such as 'do we need to apply a brake to the current level of take-up?'

I think that's more or less a given and so the rate could be around 25 - 30p.

 

[Worcester]

@TedM

Spot on with my estimates in June when I was telling people it could go as low as 26p - 30p

 

[Graeme Harrold]

Due to local supply competition Im below £11K for a 4kW system, so makes the 43.3p even more exciting. With an install cost as mine, 25-30p rate puts payback up to the 9-10 year point...when you start throwing the electricity rates in with a FIT that low, they become more significant in the whole equation, next thing is we will be following ze Germans and have FIT payments based on self consumption

 

[Worcester]

Long chat today with one of the major installation companies. Doesn't have it's own direct sales force

They are doing hundreds of 4kWp installs for less than £8K, they can do that because they have the buying power to bring in MW of panels every month, hundreds of inverters a week and make their own mounting system. One very large well know mountain named double glazing company will be entering the market sub £8k for 4kWp very soon. - Already advertising in Scotland on TV, selling from the TV ads...

 

[Graeme Harrold]

I also know of a few customers not happy with the window tactics of that mountain slightly higher than K2. Most large companies seem to supply decent kit, but usually dont follow that through with a good installation and after sales service....

 

[SRE]

Thought this might be of interest ... wish DECC would just make the announcement, then we'd know where we are!


Dear Member,

I am aware that in the past 24 hours many of you have received information that FIT is under an imminent fast track review and may be cut to as low as 9 pence across the board. The BPVA Board of Directors and I have been in contact with DECC officials to clarify this and we have been re-assured behind reasonable doubt that these are unsubstantiated rumours. I am sure that you agree firstly, this kind of news at this crucial time has a negative impact on the whole industry, it is counter productive and also may give ideas to DECC!?

I have written to those responsible for spreading these rumours and have asked them to clarify on what basis they have made these announcements. I will update you with any progress however the e-mail sent out has a sentence saying “We need resources - both cash, people and other resources to help coordinate and run a campaign to tell this story …” , I leave it to you to judge what their motive is behind writing such e-mails?

I will get back to you as soon as I have further news,
Kind regards,
Reza






Reza Shaybani
Chairman
British Photovoltaic Association

 

[Worcester]

I had a chat with the technical director at REA today, as REA had also issued a similar press release though without mentioning the rate in it, the same very low rate came out in our conversations.- It was the first time that I'd heard it that low.

The situation is that the rate of PV installations is running well ahead of DECC's forecast and their budget. So they have two options, reduce the rate to slow the uptake or find more money.

DECC have to stay within their guidelines, the problem they have is that they have no way of predicting properly the effect of tariff changes...

However the good news is that the RO budget (ROC's) is under utilised, which means that they aren't meeting their overall CO2 reduction figures, so there may be scope for moving some money around between the pots ...

 

[SolarCity]

So they have two options, reduce the rate to slow the uptake or find more money.

They should reduce the rate slightly and find more money. If the uptake carries on like it is, how much more money is it likely to cost?

Frankly, when I see how much money is paid to retired policemen, firemen and tube train drivers, I refuse to accept that money cannot be allocated to an industry which is still very much finding its feet in this country.

 

[Worcester]

BiggsSolar, the problem isn't directly the lack of money - it's where it comes from and the impact of it.

As we all (most?) know, the FITs (and RO) money is raised by a supplementary charge on everyones electricity bill.

Too many installs and that charge goes higher than DECC anticipated, and then it triggers everyone to complain about this new 'green tax'.

Although not directly paid to the givernment, becasue everyone HAS to pay it, under EU rules, the government has to account for it as income and expenditure and as such is considered a tax.

Now, seeing as it is an 'expenditure' (even though they never see the income or pay it out themselves) it is caught by two things, 1) The EU rules on government / state funding and 2) the "spending envelope agreed at the Comprehensive Spending Review" i.e. is it within their budget.

They are between a rock and a hard place.

If they cut it too hard, there will be a massive uproar from the industry and REA's other recent prelease is trying to drum up awareness of the importance of this sector of industry : 11th October 2011 Solar Power Lights Up Economic Gloom &mdash; Renewable Energy Association

 

[AIM]

Went to InstallerLive at NEC today. very interesting presentation by Brendan McGarry from Gemserv. He confirmed current rate on FIT will be payable for 25 years on all installs commissioned on/by 31/03/2012. Then who knows..............

I also think he doesn't like Easy MCS et al.............

 

[confounded]

Has anyone got any data on the FIT over the years for Germay? Did they have similar large cuts so early on? I know the recent ones have been large.

 

[confounded]

Just to put the miniscule FIT allocated budget/target expenditure of £161M in 2012 into context.

In 2007 MPs claimed £88m expenses on top of the £60,675 each gets in salary

Jaguar Land Rover got an £800M bailout from the government in 2009 even though they were owned by Tata and one of the wealthiest men in the World.

Not forgetting that the BOE just printed another £75 billion to give to the bankers because there are a little bit short atm.

 

[Graeme Harrold]

Ive been led to believe the Germans are now focusing on increasing self-consumption

SMA Self Consumption Info Sheet

 

[Worcester]

The Germans have two choices:

1) Get paid a Feed in tarrif, and it is connected up stream of their meter, or
2) Buy the electricity that the generate at a reduced rate compared to the cost of grid electrcity

They don't get to use it for free!

I can't remember the exact figures, though I am in Germany for the next 3 days so I'll bring back the figures with me