Can DECC keep the FiTs scheme open?

[TedM]

My analysis of data recently published by DECC and OFGEM shows that the spend for currently installed PV systems will run to around £450 million in the current year (April 2012 - March 2013).

This is against DECC's adjusted 'budget' for FiTs of £235 million and doesn't include any allowance for new systems being added over and above whatever was installed as at 31st March.

How will DECC react to this once they figure out what has happened? Will they be able to find another £200 million plus down the back of the sofa?

This is the breakdown:

			kWh	Tariff payments
kW range	TIC kW	Year total		year total
0-4 (pre 3/12)	797,356	717,620,400	0.47	337,281,588
0-4 (post 3/12)	49,266	44,339,400	0.226	10,020,704
4-10 (pre 3/12)	51,070	45,963,000	0.412	18,936,756
4-10 (post 3/12)	2,029	1,826,100	0.328	598,961
10-50 (pre 3/12)	148,985	134,086,500	0.345	46,259,842
10-50 (post 3/12)	10,660	9,594,000	0.152	1,458,288
50-100		7,353	6,617,700	0.345	2,283,107
100-250		8,332	7,498,800	0.322	2,414,614
>250 (pre 8/11)	101,897	91,707,300	0.322	29,529,751
>250 (post 8/11)	349	314,100	0.089	27,955
Total		1,177,297	1,059,567,300		448,811,565

(Tariffs include 50% deemed export for <10kW systems only)

 

[SRE]

Will this generate the start of the final solar rush to install before July 1st?

Can the CRC budget be used to offset the excess?

 

[jerriais]

Isn't there still a good chance that the Office For National Statistics could rule that as FITs is not part of Govt spending it should not be subject to the budget/levy control framework anyway? This is how I understand the ruling went in Germany based on EU law. I also seem to remember that their meeting to decide this was to be some time in April.

 

[Gavin A]

I do believe they#re already reacted to it by postponing RHI for domestic until the next financial year.

 

[Gavin A]

but I think we may well have to be preparing for July FIT cuts definitely happening.

 

[SRE]

At the lower end ...

 

[TedM]

DECC proposed 3 trigger levels for the various possible tariffs from 1st July. These all relate to the capacity installed between 3rd March and the end of April 2012.

A. Less than 150 MW - 16.5p
B. 150 to 200 MW - 15.7p
C. Over 200 MW - 13.6p

Installations from 3rd March to 1st April are at the 62 MW level so well under the lowest trigger point, but OFGEM data for >50kW systems does lag so there may be more installed capacity waiting to be registered.

 

[The Solar King]

Ted
Are you not being a little pessimistic basing your calculations on 900kW Hrs production per kW installed. Is this not higher than the figures generally used?

Not trying to split hairs here as the figures do beg several questions. We could yet be subject to yet further Government by cock up.

 

[SolarCity]

Judging by real world figures, 900kWh per kW installed is actually on the conservative side.

 

[Ian-LS]

DECC proposed 3 trigger levels for the various possible tariffs from 1st July. These all relate to the capacity installed between 3rd March and the end of April 2012.

A. Less than 150 MW - 16.5p
B. 150 to 200 MW - 15.7p
C. Over 200 MW - 13.6p

Installations from 3rd March to 1st April are at the 62 MW level so well under the lowest trigger point, but OFGEM data for >50kW systems does lag so there may be more installed capacity waiting to be registered.

When I was registering systems on the MCS database it did look like in March that things had slowed down to about 2-3,000 installs a week. Therefore I am confident that less than 150 MW will be installed before the end of April and therefore a rate of 16.5p wouild be introduced from July 1st 2012 which I think most companies will be able to cope with relatively easily. I am not at all keen on another reduction in October though as after July I think the industry needs a good 6 months at the new feed in tariff level before any reduction, obviously if prices of PV do drop further then the tariff has to be reduced further but I would be more keen on another reduction in December rather than October.

 

[SRE]

Not sure what your definition of "easily" is it's difficult enough at 21p and my discussions with wholesalers don't look too promising about reduced prices in July. I'm not sure we can survive the 16.5p cut - we want to maintain the quality of installation.

I agree about the timescale though, one of the points I made when I responded to the consultation - along with the difficulties with D rating in off gas grid areas. None of this meets my definition of easily

 

[Ian-LS]

ok at 16.5p it reduces a 4 kWp quote I have just done from 10.8% to 9% and adds one 1-1.5 years to the payback. This is with Hyundai panels and SMA Sunny Boy inverter so still getting a very good return imo

Admittidly its not ideal but still think at 16.5p the rate will still give good returns for domestic installations.

 

[Gavin A]

a point to note on this being that the lower the FIT rate drops, the greater the proportion of the payback is made up by the offset electricity side of things, and to a lesser extent the export payments.

So I can well envisage it becoming far more the case that it will make financial sense for high daytime electricity users, but not so much for lower daytime energy users, particularly if electricity prices rise again.

I'm hoping they'll take notice of the consultation and at least leave this reduction until October, as I think the industry needs to have 6 solid months of stability to get ourselves properly sorted out again after the last 7 months of utter chaos.

I'm also really annoyed that they've moved domestic RHI back by 6 months again, as I was working on the basis that the solar water heating side of things would pick up over the next few months to take some of the pressure off the solar PV side to cover all our running costs. Luckily this happened just before I actually took on a plumber in anticipation of that side of things building up, and before we spent money on getting accredited for heat pumps etc. Stupid thing is that my solar water heating training ticket runs out in October next year, which will be 5 years since I trained in it in anticipation of RHI...

 

[SRE]

ok at 16.5p it reduces a 4 kWp quote I have just done from 10.8% to 9% and adds one 1-1.5 years to the payback.

Does the 10.8/9% take into account the cost of the system and replacement inverter? After all once it's installed you can't get it out of the bank again. I can't get my payback to anything like that - I don't know what I'm doing wrong.

 

[Ian-LS]

Does the 10.8/9% take into account the cost of the system and replacement inverter? After all once it's installed you can't get it out of the bank again. I can't get my payback to anything like that - I don't know what I'm doing wrong.

It takes into account the cost of the system yes. We include inverter replacement costs in year 15 so it is not included in the ROI as this is based on year 1 income. Its based on PV GIS data, 40 % of the PV being used within the house as he is retired at 14.4p/kWh. I'm not going to give away exactly how much the installation was but the cost was less than £9,000.