Is this how they do it?

[solarsavings]

This has just been posted on another forum.

Posted: Fri Apr 12, 2013 9:28 pm The whole sale price of electricity is around 5p per Unit. If Solar PV generators use half their own generated electricity which they get paid the FIT rate (current 15.44p for below 4kWp) regardless of whether they use it or export it plus they get paid 4.63p export rate for half of what they generate. Then it reasonable to say that they are paid (15.44 x 2)+4.63= 35.51p per Unit they export. Which is just over 7 times the 5p per unit, so 7 times not 10 times which is a large exaggeration. Of course the fact is that although the wholesale electricity price is 5p electricity companies still seem to have no problem charging us about 12p per Unit and I doubt the transmission costs are even 5p per Unit.

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[solarsavings]

Please see this below and tell me am I nuts or is this bloke correct.

A PV system owner is paid for the FIT rate for the 2kWh their PV system has generated in a day but they only actually exported 1kWh so the cost of the 1kWh electricity actually exported to the grid is 2 x 15.44p plus the 4.64p export rate.

For each kWh they export they are roughly being paid for one kWh they use themselves, so they are not only being paid for that electricity but also saving themselves the cost of having to import it fro the grid at retail price.

To be clear I support the FIT scheme and think it a good thing I am just clear as to what we are paying for the electricity it produces for the rest of those on grid electricity to use

 

[Gavin A]

Well, they're right if you're only counting the export, but the subsidy is being paid to decarbonise the grid and create long term security of supply, so the subsidy should fairly be split across all electricity generated, not just the portion that is exported as in the original post.

The other point being missed here is that they're only comparing the costs in year 1 vs the lifetime costs of both systems. A solar PV system should have a lifetime in excess of 40 years, but the FIT subsidy is only paid on the first 20 years generation, so for the next 20 years only the export rate will be paid, so in the long run solar installed now will help to stabilise and reduce the price of electricity from 20 years time onwards, whereas fossil fuel generated electricity will be far far higher than the inflation adjusted export rate by then as it will mostly be gas generated and we'll have very little of our own gas capacity left, and will be importing increasingly restricted supplies via LNG ports, which is far more expensive.

So to give an accurate picture you';d have to look at the levellised costs of both across that 40 year period, at which point I strongly suspect that solar would be in the region of grid parity depending on what inflation rate was used for the fossil fuel / nuclear generated electricity - the strike price for nuclear gives a good indication of this for nuclear at 10p / kWh.

You also ought to be allowing for ~10% grid transmission losses for centrally generated electricity vs maybe 1-4% for distributed generation.

Personally I see no reason why most high quality solar panels won't continue to operate reasonably well for a century or more as long as they're kept free of lichen, moss, and the seals remain intact, though the bypass diodes could be a failure point. Obviously inverters will need replacing periodically, so you'd maybe need to factor in an average of 1-2 inverter replacements in the 40 year period.

If I get chance I might have a go at working all of this out, but I've got a backlog of commercial quotes needing sorting first.