Feed in Tariffs

As currently proposed, the feed-in-tariffs are likely to be the exclusive domain of the middle class with lower income households shut out from participating.

To prevent the FiT being accessible only to the middle classes, it needs to be set at a level that allows banks and private equity providers to step in and cover the capital costs of PV while sharing some of the benefit with householders.

In order to be attractive, the return needs to be between 7.5% and 8.5% (ungeared) depending on interest rate and how the FiT revenues are taxed. Some institutional investors say it needs to be higher, but if we stick to this figure we stay on the conservative side.

Taking PV as an example, the FiT as currently proposed would generate a 3-4% return in a mature market (e.g. £4700/kWp installed for a household system as we’re seeing in Italy). In a less mature market (e.g. £5.5k/kWp) the return would be 1.9%.

Looking at it another way, in order to achieve a 7.5% return in the real world based on the proposed FiT, the installed price of PV would need to be £3350/kWp! The other £1.35k is value shortfall (i.e. the difference between £3.35k and £4.7), which might be covered by an eco-minded middle income household but will certainly not be attractive to a low income household.

Bottom line: the proposed FiT for PV is too low. In order to provide an 8% return in a mature market (£4.7k/kWp installed for a small system), the FiT needs to be set at around 55p/kWh. For the largest schemes (>100kW), this would step down to 37p.

Sorry I’ve departed from my usual policy of putting all the underlying numbers up. The calculations are pretty straightforward but they require a spreadsheet and I don’t have a public facing version yet.

Sun shines through window of opportunity

By Sharlene Goff

Published: September 11 2009 17:04 | Last updated: September 11 2009 17:04

The non-appearance of the heralded “barbecue summer” underlines just how unpredictable the British weather can be. But even so, a generous incentive scheme is being launched next year to encourage homeowners to create and use their own solar energy.

The government is finalising plans for a “feed-in tariff”, which will pay homeowners for every unit of solar power they generate, even if they use it themselves. Providers say that this will turn clean energy generation into a viable investment for homeowners, rather than just a way to soothe green consciences.

“There is an interesting window between now and next April as people can take advantage of two overlapping government incentives,” says Derry Newman, chief executive of Solarcentury, a provider of solar power systems. “If they spend now, they can get some help with the capital outlay and then from April they can feed into the new tariff.”People who act early and install solar panels on their properties over the next few months will also qualify for a government grant of £2,500 towards installation costs, which are typically between £8,000 and £11,000, depending on the size of the property. Once the tariff is up and running, and people have the opportunity to make money out of the energy they create, the government plans to withdraw this grant.

Demand for solar energy has grown gradually in the UK but still accounts for a very small proportion of the market compared with other European countries.

Newman says the total amount of solar energy produced in the UK only amounts to 0.5 per cent of that produced by Germany. However, the growth targets are ambitious. By 2020, the UK government wants at least 30 per cent of energy used in the UK to come from renewable sources, compared with 5 per cent now. The new tariff scheme is designed to help hit these targets.

At present, households with solar power systems can generate renewable electricity for their own home, helping to lower fuel bills and combat climate change. Some energy providers will pay customers for energy they do not use themselves. “Green” providers, such as Good Energy and Ecotricity buy back electricity from solar panel systems at up to around 15p per unit, while the price offered by the larger providers varies. British Gas and Scottish Power offer around 5p per unit, while Scottish & Southern pays up to 28p per unit.

Good Energy also pays for any solar energy homeowners use themselves, although some other providers currently only pay for the surplus they create.

This is set to change in April, when the new feed-in tariff comes in. Through this scheme, people with their own source of renewable energy will be paid a guaranteed fixed price for each unit of electricity they generate, even if they use it to power their own home.

Rob Lewis at the Energy Saving Trust points out that the tariff will be open to households that generate energy through other renewable means, such as wind power, as well as solar. However, wind power is suitable for far fewer households.

Newman says that while uptake of the government grants for solar installation has so far been weak, the new tariff should be a catalyst for a rise in demand.

The details of the tariff are still being set by the government but the proposed price is 36.5p per kilowatt hour (kWh) of electricity generated, fixed for 25 years. This is around three times the amount most households pay through their regular energy bills, but still lower than the price paid in other countries. Households are also likely to be able to sell surplus electricity back to the grid for an extra 5p per unit.

The amount of solar energy that can be generated by a residential property will depend on its size and location. A typical terraced or semi-detached house might hold a 2kW system, according to the Energy Saving Trust. Detached properties, farmhouses and barns could generate double that.

Lewis estimates that a 2kW system is likely to cost around £12,500 to install and could generate around 1,700 units of electricity per year. This would translate into an annual profit of around £770 taking into account the income for generation and export and the benefit of cheaper electricity bills. Based on these figures, it would take a household around 15 years to recoup its investment, while those that take advantage of the £2,500 grant would see this reduced to around 12 years.

October 2008 Goverment anounce new Feed in Tariff

Today the UK parliament has published amendments to the Energy Bill, which provide more information on the potential feed-in tariff for renewable energies. Ed Miliband, Secretary of State for the Department of Energy and Climate Change in the UK, said last week in a presentation to the House of Lords that he intends to amend the current energy bill that goes before the Houses of Parliament this week.

A timeframe of one year has been put on implementation from the passing of the bill. Quoted from amendment 5 (1)“The Secretary of State shall make regulations within one year of the day on which this Act is passed for the purpose of introducing a renewable energy tariff for a specified fixed period to specified producers of renewable energy.”

These regulations will cover tariff levels and conditions including: amount of the feed-in tariff by technology, size and class; who will be eligible; how it will be funded; who will administer the scheme; and importantly the right of “specified producers of renewable energy to have their production conveyed into a distribution system as a priority.”

Renewable source (of energy) is defined in the Utilities Act 2000 (c.27) as “renewable sources means sources of energy other than fossil fuel or nuclear fuel”.

The document goes on to stipulate that The Secretary of State within three months of the passing of the bill must make regulations “for the purpose of granting permitted development status (developments that do not require planning permission) to specified micro-generation installations”. Importantly these clauses relate directly to small wind turbines and air source heat pumps but include “any such further technologies The Secretary of State may consider appropriate”.

It seems likely that any feed-in tariff could include PV and solar thermal as part of the package. At the least the amendments allow for solar power to be included during the regulatory process.

Reported on 17-10-08
Ed Miliband, Secretary of State for the Department of Energy and Climate Change in the UK, said yesterday in a presentation to the House of Lords that he intends to amend the current energy bill that goes before the Houses of Parliament next week. The amendment should see the inclusion of a feed-in tariff for the micro-generation of renewable energies.

The newly-formed Department of Energy and Climate Change was created by the Prime Minister on the 3rd of October to “give an even greater focus to solving the twin challenges of climate change and energy supply.”

Ed Miliband said in his speech to Parliament, “...but having heard the debate on this issue, including from many colleagues in this House, I also believe that complementing the renewables obligation for large-scale projects, guaranteed prices for small-scale electricity generation, feed-in-tariffs, have the potential to play an important role, as they do in other countries.”

The UK has signed on to the EU directive to produce 20% of all energy through renewable sources by 2020. However, the UK government has come under much criticism over the past few years for doing little to achieve this goal. Should the current scheme of ROCs (Renewable Obligation Certificates) remain as it is, then the UK will only achieve 5% by 2020.

The move by the Prime Minister to create the new department has been met with wide approval from such industry associations as REA (Renewable Energy Association) and the STA (Solar Trade Association). The amendment was lobbied for by REA acting on behalf of over 35 organisations including Sharp UK, Schott UK and Solar Century.

The UK energy market was the equivalent of 232.1 million tons of oil in 2006. Currently, less than 2% of energy is produced by renewables.

There are three crystalline module manufacturers in the UK: Sharp in Wales, a company that converted their VCR factory, GB SOl and Romag. G24i is working with thin films and PV Crystalox is the only ingot manufacturer in the UK.

The UK renewable energy strategy consultation document outlines a possible feed-in tariff system (pictured below).

Feed in Tariff

he Government is having to face up to some tough home truths as new research showsmassive cuts in household energy use are achievable.

In the report Home Truths, Dr Boardman of Oxford University sets out how the Government can reduce carbon emissions from UK homes by 80% by 2050.

The changes would also:

• Cut fuel poverty
• Create jobs
• Cut energy bills
• Increase fuel security.

The report was commissioned by Friends of the Earth and The Co-operative Bank as part of The Big Ask campaign.

Transforming UK homes

Carbon dioxide emissions from housing make up 27% of the UK 's carbon footprint.

Home Truths sets out - for the first time - a blueprint for delivering an 80% cut in carbon emissions from UK homes. The blueprint is based on:

• High targets 
  for local authorities on cutting emissions.
• Tough energy standards 
  for homes and household appliances.
• Quantum leap in financial support
  to make insulation and micro-renewables affordable.
• Greater help for householders
  to understand and tackle their carbon footprint.

The report shows how energy use in UK homes could be transformed. Homes could start providing electricity to the National Grid - generating up to 10% more energy than they require - by 2050.

Timid Government

The report is critical of the Government's timid approach and its failure to reduce emissions from the UK's 25.8 million existing homes - almost all of which will still be occupied in 2050.

It concludes that the Government's latest policies are on course to produce only half the emissions savings required.

The Government has plans to build 10 new eco towns. But we need every town to be an eco town.  This report shows how.

Friends of the Earth Campaigner Ed Matthew

Sunday, May 20, 2007

Pay people for the power they provide!
Donnachadh McCarthy is a micro-generator, green consultant and former Liberal Democrat federal executive member. In 1997, before it was fashionable, he installed solar panels on his South London roof. (Though the illustrations are of local solar heating and generating installations.) He has since added an experimental wind-turbine.He calculates that he will never have to pay for energy again and is even able to recoup some of the cost through a deal with EDF Energy. Donnachadh receives from them 7p per unit for electricity generated which he does not use. Thus, he was able to bill them for £45 last year. At the retail price of 11p, he reckons to have made a further saving of £55 annually.However, he paid over £13,000 for his solar panels and wind-turbine. Even with a government grant, he reckons that it will take between 90 and 120 years for him to pay back the capital cost of the system.Some UK energy companies will pay the full market price for micro-generated electricity, but charge the customer for the installation of the export meter. This could be £100 or more.The German government compels its energy companies to buy back from consumers at a far more generous rate. That could account for the fact that there are over 300,000 installations of solar panels generating electricity in Germany. The UK equivalent is 5,000.The Labour MP (and at one time a challenger for the deputy leadership of his party) Alan Simpson chaired a recent symposium at Westminster. Simpson is an enthusiastic micro-generator, but only receives 40% of the market price for his exported electricity. German customers get four times the market price. Simpson calls for a similar deal for UK consumers, guaranteed over twenty years.The capital cost of solar panels has come down. However, the UK government grant has come down even more. The maximum is now £2,500, whereas it was previously, in practice, £7,000. (See table below.)The government defends its policy, saying that more households will be able to benefit from the lower grant. It also calculates that subsidising households as the Germans do will cost £380m annually.However, our Shadow Trade and Industry Secretary, Susan Kramer commented:“This announcement means fewer people will be able to afford to generate their own electricity.“This will have a knock-on effect on the industries servicing green energy. Even before this announcement, the mishandling of these grants has caused redundancies. This announcement will mean businesses withdrawing from the sector and further redundancies.“The Budget announced an extra £6million for the Low Buildings Carbon Programme. Given that the cuts in grants will no doubt lead to reduced take-up, how exactly will this extra money be spent?”
Technology
Previous maximum grant New maximum grant
Solar Photovoltaics
£15,000 £2,500
Wind Turbines
£5,000 £2,500
Small Hydro
£5,000 £2,500
Solar Thermal Hot Water
£400 £400
Ground Source Heat Pumps
£1,200 £1,200
Automated Wood PelletFed Room Heaters/Stoves
£600 £600
Wood Fuelled Boiler Systems
£1,500 £1,500
Posted by Aberavon & Neath Liberal Democrats

Schoot Solar Thermal Panels

Principle of Solar System Operation

The SCHOTT Evacuated Tube Collector ETC16 efficiently converts solar radiation to heat.
Solar radiation, direct and diffused, is absorbed by the ‘selective coating’ on the absorber surface of the internal glass tube and converted into heat. This heat is carried by the heat transfer liquid and passed to the hot water cylinder during circulation. The vacuum eliminates convection and conduction heat losses as well as protecting the collector from adverse weathering influences.

Solar Energy

The sun is a variable power supply. It is available only during the day and then in varying strengths depending on time of day, cloud cover and season. The greater the intensity of daylight the higher the performance of the solar system will be. On days of low solar radiation the output from the solar collector will reduce providing less energy.

The solar heating system consists of many separate components that play a vital part in ensuring that the system operates to maximum temperature performance efficiency in all types of weather.

The solar circuit is indirect and pressurised. There is no top up tank feeding the system and the sealed circuit does not require topping up.

It is recommended that the system is left switched on at all times

Domestic Hot Water

The hot water cylinder is heated by a heat transfer liquid (Tyfocor GLS) circulating through the solar heating system from the solar panels to a heat exchange coil low inside the hot water cylinder. Having dissipated its energy the heat transfer liquid is pumped back to the solar collector for re-heating. This process continues whilst there is a transfer of heat from the collector to the cylinder. Provided the measured temperature difference DT is higher or equal to the pre-set value and the minimum collector temperature is reached the control unit will operate the pump to maintain the circulation. If these conditions are not maintained the pump will switch off and the control unit will wait for the temperature of the collector to increase before restarting the heat transfer process.

Solar Installations

Talk to me if you have any quiries about solar installations. You can call me on 07092 172269