DECC launch FIT review

[The Solar King]

Best information is now tomorrow. Pressure is on until last minute. STA gave evidence to CCC in Parliament yesterday, and 10:10 attempted to give George Osborne a present of a PV array on his constituency office (which was declined!). They are going to see if Boris Johnson would like it instead

 

[Somecamel]

I'm hearing there could be the announcement tomorrow possibly at 7am (reminds me of 4 years ago).

Seems to be a general attack on all things Green from the Tories at the moment what with the vote tonight to allow Fracking under national parks.

Anyone have any ideas on what to expect?

I'd like to see 8p per Kwh with the tariff reduced down to 10 years.

I expect the EPC banding to be upped from a D to a C.

 

[whinmoor]

Yes, it looks like tomorrow will be the big day. I'd bite your hand off at 8p per kWh. I can't imagine it will be that generous given the recent rhetoric.

Typical of them to wait until the last moment, break the bad news and then disappear to their comfy mansions for a relaxing vacation whilst thousands of poor souls who actually do the real work face a bleak Xmas and New Year.

I'm reasonably comfortable with the idea of needing an EPC Band C to qualify as long as the PV can be included in the EPC if required. I know, however, that other installers on here (e.g. SRE) would really struggle with that.

 

[Gavin A]

I wish they'd just get it over with, the suspense is doing my nut in.

 

[SolarCity]

D to C would be a nightmare. Vast majority of our installs are on 'D' rated properties.

 

[The Solar King]

Now published 4.39p.........
Still trying to track down EPCs

 

[Energetic]

Breaking: Government sets future domestic feed-in tariff rate at 4.39p per kWh | Solar Power Portal

 

[Somecamel]

FITS to be paused from the 15th Jan to the 8th Feb to allow time for the implementation of cost controls

 

[The Solar King]

Looks like EPC of D status stays but must be before date of commissioning.

 

[The Solar King]

Caps are a joke. above 50kw, 70 installs per quarter.

 

[SibertSolar]

Everyone focusing on the actual FiT rate but the caps are a killer....

 

[The Solar King]

Caps are a joke. above 50kw, 70 installs per quarter.

 

[Somecamel]

So around 15000 installations every quarter for the -10kW banding.

This is going to be fun trying to explain to customers that we can't actually tell them what rate they are going to receive.

 

[TedM]

DECC docs are here https://www.gov.uk/government/consultations/consultation-on-a-review-of-the-feed-in-tariff-scheme

 

[whinmoor]

So, there's basically another rush on. From 1st Jan until 14th Jan, a few "lucky losers" can get 12.03p.

After 15th Jan, everyone is pretty much stuffed.

 

[TedM]

My very quick extract of the main points (Note -EPCs are affected but no change to band D, and extensions will no longer be eligible)

1.42 All new installations applying for FITs on or after 15 January 2016 will
be subject to a new system of caps from 8th February 2016 with the following
key features:
-Maximum of £100 million a year for new installations by April 2019
from February 2016 divided between technologies and degression
bands to set quarterly deployment caps (expressed in terms of
aggregate total installed capacity of MW) as set out in Table 2
below.
-Deployment to be tracked by Ofgem based on the total installed
capacity of new installations registered on the Microgeneration
Certification Scheme (MCS) database on or after 15 January and
Ofgem’s records of applications for ROO-FIT accreditation received on
or after 15 January and ROO-FIT pre-accreditation received on or
after 8 February.
-The time and date (to the second) of an installation’s MCS certificate
or application for ROO-FIT accreditation or pre-accreditation to be the
basis for determining whether or not that installation qualifies under
any particular cap.
-A queuing system for applicants who miss out on a cap, meaning that
their applications for FITs accreditation are frozen and they have a
place in the queue when the next cap opens (but no guarantee of any
support until they qualify under a cap).

-A two-speed system for recycling underspend:
(i)In-year rollover process
–any unused capacity for a particular technology and degression band
from one quarter simply gets added on to the next quarter; and
(ii)A budget reconciliation for FITs, which we expect to be
biannual but could be more or less frequent depending on
deployment: this would bring together any underspend
and, subject to addressing any budgetary pressures,
redistribute it as deployment cap ‘top-ups’. In considering
where Government redistributes these ‘top-ups’, Government will take
into account its policy priorities. At the moment, we expect this
redistributed underspend could be towards solar PV to continue
supporting a trajectory towards subsidy
-free deployment, as well as providing additional support to meet our earlier
deployment projections.

Contingent Degression
1.49 Recognising that two thresholds provided added complexity,
Government has decided to implement only one degression threshold at the
level of each quarterly cap. The contingent degression rate will therefore
be 10% if the cap is hit. DECC will keep this rate of contingent degression
under review and consider amending it if support and/or deployment levels are
adversely impacted by a constant series of tariff degressions. More detail is
set out in the response to question 4 in the consultation analysis below.

Pre-accreditation re-introduced
1.52 Government therefore considers that the re-introduction of pre-accreditation
is appropriate. Pre-accreditation will be re-introduced from 8 February 2016.
As before, it will be available for solar and wind projects over 50kW and for all
anaerobic digestion and hydro projects. Validity periods of pre-accreditation will be
six months for PV; one year for wind; and two years for hydro and AD. Government
will also reintroduce the additional six month period for community energy projects
on top of the relevant period per technology. Applications for pre-accreditation will
be subject to the new deployment caps in the same way as applications for full accreditation.

Extensions
1.56 The consultation sought views on whether to remove the ability of
installations to extend their capacity under FITs. There was only limited
support for the proposal with the majority of respondents disagreeing with
the proposal, principally because it was suggested extensions offered better
value for money to the generator. Government has decided that the right to
receive a generation tariff for extensions should be removed for all
installations which commission on or after 15 January 2016. Whilst
encouraging the deployment of renewable installations, the scheme should
provide better value for money for the consumer, rather than the generator,
and extensions may provide generators a tariff that provides a higher rate
of return on investment than that set out in the scheme’s EU State Aid approval.

Other
1.59 Government does not propose introducing changes to the FITs scheme in
relation to the export tariff, tariff indexation, competition, smart meters,
grid management and sustainability criteria for anaerobic digestion at this time.
However, Government may consult further on these proposals in future.

EPC
7.24 Therefore, DECC intends to implement the proposal to require the EPC
to be issued prior to the commissioning date of the PV installation as a
scheme eligibility requirement for new applicants. The effectiveness and
impact of this change will be monitored and, if necessary, reviewed
following its implementation.

Pause
1.60 The budget agreed for FITs to April 2019 is up to £100m of new spend
from January 2016. In order to preserve this budget for future deployment at
tariffs which provide better value for money to the consumer, Government
intends to implement a pause to the scheme for 4 weeks. The pause will
start on 15 January 2016 and will continue until 8 February 2016 when the
new tariff and deployment caps will be in place. In deciding to implement a
pause Government has balanced the need to preserve the budget against
concerns raised in consultation that a pause would limit the ability of some
companies to operate. Government considers a pause of four weeks to be
justifiable in an effort to preserve the longer-term future of the scheme.

1.61 The practical effect of this is that, during the pause, no new
installations will be accredited for FITs save for those with pre-accreditation
granted before 1 October 2015 who are applying for accreditation within the
period of validity of the pre accreditation. Generators will still be able to apply
for FITs in the normal way. Installations which commission and apply for
FITs during the pause will be in the queue when the new deployment caps
and tariffs come into force on 8 February 2016.

1.62 The Government recognises that there may be some cases where
applications for FITs are received on or after 15 January in respect of
installations which have MCS certificates dated before 15 January.
Table 12, in response to question 12 in the detailed analysis,
provides an overview of the approach for transitional installations.

Implementation
1.63 An amended FIT Order and Licence Condition modifications will be laid
in Parliament on 17 December 2015. The Order will be subject to a minimum
21 day praying period before it comes into effect on 15 January 2016. The
Licence Condition modifications will be subject to a 40 day praying period
before coming into force on 8 February 2016.

1.64 The first cap period will run from 8 February to 31 March 2016. Ofgem
guidance on how to apply will be published ahead of this date.

 

[Gavin A]

ok, I'm asking if Green Party would back / make a legal challenge to this pause nonsense.

 

[SibertSolar]

It's a bit odd isn't it....how come they didn't cite a specific mechanism within the energy act or other policy framework, when outlining the reasons/justification for this pause?

 

[SRE]

We struggle to get most of ours to D with solar never mind before.

 

[TedM]

Unless the days that Parliament is sitting have been changed then I can't see how they work out 40 days comes to 8th February. I reckon that is only 36 days from today. As there is another break in Feb I think 40 days would be 22nd February. Perhaps, under their interpretation of the wording, they think they can count 4 of the days when Parliament isn't sitting.

 

[TedM]

These are the relevant tables:

 

[SRE]

Looks like EPC of D status stays but must be before date of commissioning.

Apologies if this is a stupid question - so the D rating must be achieved without including the solar? The vast majority of our work doesn't qualify because if oil/lpg installations if that's the case.

 

[Somecamel]

Apologies if this is a stupid question - so the D rating must be achieved without including the solar? The vast majority of our work doesn't qualify because if oil/lpg installations if that's the case.

That's my understanding of it as well

 

[solarsavings]

Another daft question: The export tariff?

And another one: Can anyone make these figures work. Solar portal says it equates to a return of 4.8%.

 

[Somecamel]

Export is staying as it is, including staying at RPI.

I can make them work albeit with a much leaner business model.

 

[SRE]

Is there any indication that costs are going to drop? We're really sitting on the fence with this. We were going to do a bit more property development but our capital is tied up in a house we're letting to flood victims for the next 6 - 8 months so I could do with keeping solar going for a bit longer but can't really make the figures stack up.

 

[Somecamel]

I'm not sure how much more panel prices can drop what with the Minimum Import Price so that only really leaves Inverters and mounting.

I'm lucky as I live in the South East so can easily generate 1000kWh per kW installed so the numbers stack up better down this way whereas in Edinburgh for instance it's 852kWh per kW installed.

I'd imagine there'll be a lot less competition as well when the ex double glazing lot bugger off.

Storage is an option but not quite ready yet.

 

[TedM]

Return on a 4kWp at 1000 kWh/kWp

gen tariff 4000 x 4.39p = £175.60
export 4000 x 50% x 4.85p = £97.00
offset 2000 x 13p = £260.00

total = £532.60

to get:
7 year break even = install cost £3728.20
8 year break even = install cost £4260.80
9 year break even = install cost £4793.40

compared to the pre-15th January rate of 12.03p

gen tariff 4000 x 12.03p = £481.20
export 4000 x 50% x 4.85p = £97.00
offset 2000 x 13p = £260.00

total = £838.20

to get:
7 year break even = install cost £5867.40
8 year break even = install cost £6705.60
9 year break even = install cost £7543.80

So looking at the 8 year break-even you have a difference of 6705 - 4260 = £2445. I can't imagine prices can drop that much.

Over the full 20 year life it is a reduction for the householder of (838 x 20) - (532 x 20) = 16760 - 10640 = £6120

 

[Somecamel]

I'm staying positive and am confident we can install 4kW systems circa £5500-£6000.

What I think will happen though is there will be a lot more >4kW+ systems coming under the 10kw banding 'space permitting'.

That would greatly improve the ROI as our installation charge isn't going to double for say an 8kW system over a 4kW.

The Old Tariff bands did warp the market slightly, what we need now is a better way of asking for DNO permission for the slightly bigger systems or even better, the removal of the 16amps per phase limit so we can get on with the installations quicker especially considering the new caps (which I must admit, I'm not quite sure I fully understand yet).

Either way this is going to a testing time.

 

[SRE]

We're doomed :-( Best we can expect is 3400kwh and that's unusual these days.

 

[whinmoor]

Apologies if this is a stupid question - so the D rating must be achieved without including the solar? The vast majority of our work doesn't qualify because if oil/lpg installations if that's the case.

What if the date of the PV commissioning and the EPC are the same? I do our EPCs personally when the panels are on the roof and include the PV to give the score a "boost". Usually it's not necessary to get the D but occasionally it is.

It seems silly to me to do the EPC in advance as it will be inaccurate within a couple of weeks when the PV is added. It makes much more sense to do it either at the same time or after the PV has been fitted.

 

[SRE]

I'd say that 90% of the time we need pv to get a D rating.

 

[Gavin A]

on the plus side, there could be some add on work to get the D rating prior to the PV going in, and often the add on work is better payback time than the PV will be, so that could improve overall payback.

Some of it can be pretty simple, like replace heating controller, add thermostats, add insulation jacket to water cylinder, top up loft insulation, add chimney balloon etc.

ALso SRE - you may be aware of this or may not, but IME most supposedly solid stone walls actually have a small cavity if you drill through them, sometimes rubble filled, sometimes not, but EPC assessors usually treat them as if solid. Makes quite a difference if the EPC assessor puts into the software as having a small cavity rather than being solid wall. One of the main reasons that the real world performance of external wall insulation on solid wall properties was nothing like as good as SAP predicted.

 

[SRE]

Interesting point about the cavity Gavin. Most of ours need boiler changes so it's a major change but the cavity situation might make a difference.

 

[Gavin A]

Interesting point about the cavity Gavin. Most of ours need boiler changes so it's a major change but the cavity situation might make a difference.

we've sneaked one in that way that just made it to a D with 1 point to spare.

 

[TedM]

[edited]
Looking at the DECC figures they are using a reference 3kWp system costing £4890 and with 45% self-consumption. DECC have changed the load factor modeling and are now using the Midlands and not the South-West for load factor for PV and also accounting for panel degradation over 20 years. So I think that results in the figure for kWh/kWp being 946.

2838 x 4.39p = £124.59
2838 x 50% x 4.85p = £68.82
2838 x 45% x 13p = £166.02

total £359.43

which is a 13.6 years for break-even.

Not sure how many people would be interested in a 13 year break-even. I don't think I would be.

I've excluded opex from that for simplicity, but including it only pushes the break-even date out further. Including RPI would start to bring it down but is so small at the moment that it wouldn't have much effect.

 

[Gavin A]

the one good point about the consultation was that the cost assumptions weren't stupid.

 

[The Solar King]

To make it work up here based on 850kW/kWp on a 4kW system, price needs to be £4500.00 to give a 15 year payback. This is using a full DCF with self use calculated out at around 37%. Investment yield is around 7%.

 

[The Solar King]

Real problem for commercial roof tops is lack of capacity. Other worry on capacity in 0-10kw band is social housing hoovering up the volume leaving nothing left for anyone else.

 

[Gavin A]

other problem for commercial is the EPC D requirement not including the PV.