DECC has, at last, announced the UK feed-in-tariffs (FiTs)for renewable generation. On the whole it's an increase in the tariffs depending on the technology. The government scheme to start in April this year will include:
- payment for the electricity you generate guaranteed for 20-25 years
- payment for any surplus electricity you don't need guaranteed for 20-25 years
- money saved from the electricity you no longer need to buy
Although the return on investment averages out at around 5%-7%, Friends of Earth thought the policy too timid and the Solar Trade Association argued that returns should have been more like 10% to garner interest.
However, Solarcentury executive chairman Jeremy Leggett said the tariffs would be enough to encourage homeowners to install solar panels earning more than £1,000 per year with a typical solar electric system.
In plain english what does it all mean?
If a business or a household installs a standard Solar PV unit it's likely to generate 2-2.5kilowatt peak with an annual output of around 2000KWh.
Annual output: 2000 KWh
FiT 41.3p per KWh (guaranteed and index linked for 25 years, paid to you by your electricity provider)
Total value of FiT £823
Used in the home/business 1,200 KWh (your electricity supplier is charging around 12p KWh)
Savings from not buying supplier electricity £144
Electricity exported 800 kWh (electricity you don't need at various points in the day. You can sell for 3p or on the open market. The 3p rate is guaranteed for 25 years and index linked)
Export payment £24
Total return £991
The figures may vary somewhat, but they are in range with most calculations I have seen. The cost of this type of installation will vary from £8000-£12000, but the good news is that the FiT and export price is index linked which means a return on investment is likely to be around 5%-7%. Other factors worth considering are whether you predict energy prices will rise as this will improve returns. At the same time, energy security is increased and you have significantly reduced your carbon emissions.
The great advantage of solar PV is that it is easy to install and once it's there you don't have to do much. Maintenance is minimal. The main disadvantage is that the load factor is low compared to wind or biomass.
Next time I'll be comparing Solar PV with Wind.
Hi Ben,
ReplyDeleteSo what are your thoughts on the likely cost impacts for installation of solar PVs now that the feed in tariffs are finally here? Surely there will be an economy of scale increase in that hopefully demand will increase leading to a more competitive/efficient market for solar? I hope so, as I want to install some and they're currently rather expensive!!
Well, watch this space! I would imagine that banks, councils, utility companies and other businesses will offer a pay-as-you-save scheme...I'll be posting on this very soon.
ReplyDeleteRe: the technology - it will come down in price over time, but the government has incentivised us to install now rather than later.
This is so far from what Monbiot is saying in the Guardian, that I wonder if he's on a different planet... or is it that he's right and this is all based on living in Nevada?
ReplyDeletehttp://www.guardian.co.uk/commentisfree/2010/mar/01/solar-panel-feed-in-tariff
I read that article and commented. He is right to point out that it is not necessarily the most efficient way to generate energy and may regressively raise bills.
ReplyDeleteBut, he doesn't allow for the impact of ESCOs (which will allow pay as you save and reduce bills for those in social housing), or take into account any change in behaviour as a result of installing solar or the slow pace of change because of a lack of knowledge (true of Anaerobic Digestion and CHP) or NIMBYism (for wind and AD).
He's right that we have go nuclear, but we need a mix and solar PV may kick start the process of householders and businesses analysing their energy use and what are the best returns. If we produce energy we tend to be more careful about using it. Studies show that solar PV seems to generate the best change behaviour without a noticeable rebound effect.
Personally, I think the government has thought this through and the heat incentive due to come in next year will revolutionise our energy consumption.