What happens next?

[TedM]

Given the new degression mechanism to the Feed-in Tariff scheme for PV what is likely to happen next?

Current installs for sub-10 kW systems are running at only 48 MW per quarter (taking the most recent MCS database figures the weekly average is just 3.8 MW).

If the installs are below 100 MW then there will be a 0% degression that applies to rates from 1st November. And if that was repeated for the following quarter (installs in August – October) then the next degression, from 1st February 2013, would be 0% as well.

This would mean that the maximum two quarters at 0% condition would be triggered and the next degression point would be 3.5% even if the installation rate remained below the 100 MW per quarter threshold.

So the worst case (from the point of view of capacity installed) would be that a mandatory 3.5% degression would kick-in from 1st May 2013. This would take the 16p rate down to 15.4p.

This would still be subject to DECC reviewing the degression mechanism and making any other adjustments based on changing installation costs. But this would only happen following a consultation process.

The alternate worst case scenario is that the maximum 28% reduction would be triggered in each of the first two quarters. This would reduce the 16p rate to 11.5p from 1st November and then 8.3p from 1st February.

 

[SRE]

Neither situation is ideal - if we've no degression it's because we've no business, maybe I won't be caring about what is happening about solar then and my stress levels might have reduced a bit. We can't keep going at this level of installations, we've only done 17 this year so far and when you consider we convert 80% ish then it's not because our price or service isn't right but we couldn't possibly survive another year like this.

I'm not keen on the bust situation either because there isn't much fat left to trim, although theoretically if we've had loads fo work at least there's a chance to stah the cash for the quieter periods.

Fingers crossed for a nice orderly 3.5% followed by a pause then another 3.5% follwed by a pause - everyone has a chance then.

Thansk Ted - really useful info.

 

[confounded]

So let me get it straight, they say they are committed to micro generation for households and we have a 22GW target by 2020. That requires the industry to install nearly 3GW/year for the next 7.5 years.

At current installation levels the 22GW will take 105 years to achieve if the small scale installations dominate delivery. However if things remotely shows signs of recovering with sub 10kWp system providing enough to achieve 22GW in 55 years (100MW/qrt) they will cut the tariff.

Something does not add up, watch what they do not what they say.......

 

[TedM]

I find it quite doubtful that the FiTs scheme, as we currently see it, would continue once the tariff is much below 10p for 4kW systems. The psychology of the domestic market isn't remotely understood by anyone at DECC. There were lots of people who were interested in getting £2k income a year when that represented an 8% ROI. People are not so interested in getting £500 a year even though the ROI might still be 8%.

It's pretty clear I think that Barker's 22GW dream relies entirely on costs coming down to the extent that large solar farms would start to be installed again even at the lowly tariff they get.

 

[confounded]

It's pretty clear I think that Barker's 22GW dream relies entirely on costs coming down to the extent that large solar farms would start to be installed again even at the lowly tariff they get.

The rate they receive is not as lowly as at first site. For the very largest farms they achieve a FIT rate of 8.9p, the large scale solar farms are rapidly becoming the most attractive option as they can also negotiate a higher wholesale price for the electricity they sell, I have heard 7-8p is possible for green energy (anecdotal). This means that for large scale farms they can achieve an average price per kW produced of 16-17p. The <4kWp tariff and feed in element will be an average of 18.25p/kWh produced as of August.

This could well be the end of the rent a roof industry as funding from the city will pile into large scale production rather than the complication of installing on multiple roofs.

 

[SRE]

I find it quite doubtful that the FiTs scheme, as we currently see it, would continue once the tariff is much below 10p for 4kW systems. The psychology of the domestic market isn't remotely understood by anyone at DECC. There were lots of people who were interested in getting £2k income a year when that represented an 8% ROI. People are not so interested in getting £500 a year even though the ROI might still be 8%.

I agree Ted, I'm currently trying to make 8.9p work for a listed building that I'm working on and the figures just don't stack up even when I cut my margin to the bone. It looks even worse after August but planning won't come through before then.