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Monthly archives: January 2010

The allure of solar energy lies in their ability to provide returns regardless of conditions such as a strong economy, low inflation, or a bullish stock market. And indeed, one of the key benefits of solar energy is this ability to profit in virtually any economic environment.

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La Rioja is a province and autonomous community of northern Spain. Its capital is Logroño. Other cities and towns in the province include Calahorra, Arnedo, Alfaro, Haro, Santo Domingo de la Calzada, and Nájera. The climate is mainly Mediterranean climate. The average temperature ranges from 11.8°C – 31.8°C (53°F – 88°F) and the precipitation ranges between 300 mm – 600 mm as an annual average.

The installations are built and currently connected to the national electricity network under the legislation and fixed Feed In-Tariff of the RD 661/2007. Therefore these projects will benefit from the current high selling price of 0,47 /kwh for a period of 25 years (plus CPI correction). Official studies of solar radiation confirm that Spain has the highest irradiance levels in Europe which is reflected in the high solar energy productivity of the region.

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On Friday rumours emerged that the German government is likely to significantly reduce the price paid for electricity produced by solar panels. Furthermore, the reduction may be made as early as April rather than in July as previously anticipated.

We expect an official announcement this week and will update you then but the rumours alone have already sparked hefty losses in solar energy stocks around the world. This is not surprising considering how large a proportion of the world solar market Germany represents. In 2009, close to 4GW of solar energy capacity were installed. The next biggest markets, Italy, France and the US were a maximum of 1 GW each. If demand drops significantly in Germany, it could lead to more pain for solar equipment manufacturers.

Personally, I believe a significant reduction in Germany’s feed-in-tariff is a good thing for the industry. Things got out of hand in 2009 as installers and manufacturers (particularly inverter manufacturers) struggled to meet demand. Everyone wants the solar industry to grow, but it must be stable growth. Too much too soon and there isn’t enough time for problems to resolved.

For example, in the southern part of Germany, solar energy makes up close to 5% of all energy production now. This is already causing problems for the electricity grid because of the intermittency of solar power. If solar energy were to grow more slowly, these problems could be dealt with as they arise.

The other problem of the feed-in-tariff is that it was making people too rich. Solar farms in Germany are providing 10-15% annual returns virtually risk free. No hedge fund can offer that. Given the risk of a solar investment, the return needs only to compete with long-term savings accounts, so if they provide just a 4% return, that should still be attractive. It is hard to predict what the effect of the drop in feed in tariff will be. Certainly, if the return on investment is lowered, there will be a reduced incentive and less of the ‘urgency’ which gave rise to the boom of last year. However, if there is still a reasonable, positive return on investment, then large numbers of people will still take up the opportunity. If someone handing out 20 pound notes switches to giving out 10 pound notes, would people start walking away?

On the verge of releasing details of the UK feed-in-tariff, what does is the message for UK policy makers observing this 17% cut? Why should they listen to the voices calling for an increase in the tariff whilst all our neighbours are busy cutting theirs? I would ask the government not to waiver in their commitment to growing the UK solar industry. The market in Germany is one thousand times greater than that of the UK (4 gigawatts compared to roughly 4 megawatts last year). The Germans have created an efficient industry with that is able to provide solar installations at competitive prices. The UK industry has not got off the ground yet. We must provide a decent incentive so that people begin to accept the concept of solar energy in the UK.

The experience of Germany shows that subsidies do not have to be provided forever, however the industry must be there before you can scale back.

My message to policy makers is this; we have a lot of catching out up to do, so don’t lose your nerve before we have even started.

With the UK still struggling out of recession and with little good coming of the much heralded Copenhagen climate change summit, brighter news has presented itself in the recent report that the UK has over achieved on its carbon emission reduction targets.

Set by the Conservative government back in 1990, the original reduction target was to be 34% by 2020, however, recent findings suggest that this reduction will now be something nearer 36%, with a number of factors helping to reduce carbon emissions across the UK. The report, carried out by the Committee on Climate Change (CCC) and released in October is already sparking debate as to whether the government is doing enough to fight climate change through carbon reduction policies.

Government action

While the government has announced that it will not go ahead with the construction of any coal power stations employing carbon capture and storage, many believe that not enough is being done to bring about a wholesale change in the way Britain produces its energy.

However, despite surging ahead with non-renewable energy programs, it would be difficult to argue that ministers in Westminster have turned a blind eye to the potential of green energy. Indeed, the Department of Energy and Climate Change (DECC) has already overseen the devlopment of some of the largest off-shore wind farms in Europe.

The Clean Energy Cash Back Scheme (essentially a feed-in tariff) similarly represents a commitment to reduce carbon emissions through legislation. The DECC is already publishing papers on the future landscape of the UK power infrastructure with a grid capable of connecting various micro-generation sites across the country.

The recession factor

With the world financial crisis manifesting itself in the UK in the form of a protracted recession, this has of course had an effect on energy use with the population using less energy and therefore generating less carbon. Critics of the reports findings have highlighted that some of the carbon reduction percentiles can be accounted for by the economy and any imminent up-turn could similarly skew the figures.

In response to such assertions, Ed Milliband, minister for the DECC stated that,

“The recession will not deflect the Government’s efforts to cut emissions and move to a low carbon economy. We must redouble our efforts at home and internationally.”

With the growing global trend towards renewable energy Britain is finally taking the first fundamental steps towards large scale micro-generation of electricity. With the UK government’s announcement that they will be going ahead with the development of a 100 billion pound wind farm in a giant off shore project, the UK is set to continue as Europe’s leading exponent of wind energy.

However, with wind representing a mere 0.5% of Britain’s energy generation, the future for wind and other important renewable energy means will come in the form of households producing their own electricity with small scale micro-generation kits, installed on their property.

These such small scale endeavours, while initially expensive, have been rendered viable through the announcement of the imminent introduction of a feed-in tariff which will offer homeowners ‘cash back’ for surplus renewable energy which is fed back into the national grid. In the UK, this financial incentive will come in the guise of the much anticipated ‘Clean Energy Cash Back’ scheme but elsewhere they have also proved successful at encouraging homeowners to install their own renewable energy kits.

Solar potential for UK households

Despite the gloomy skies and similarly murky outlook for the economy, the UK has the potential to become a competitive player in the world of micro-generation and emulate the leading light of renewable energy, namely Germany. Homeowners who may currently wish to invest in solar panels for their property have the twin hurdles of finance and confusion to overcome before parting with cash.

Fortunately, with regards to solar photovoltaic (PV) technology, investors will have the costs of installation (typically around 6000 pounds) softened through savings on energy costs; amounting to around 250 pounds p/a. Also, with cash back payments on surplus energy from the utility companies a typical household with a solar pv kit could hope to repay the initial outlay while at the same time saving around 1 tonne of carbon emissions p/a.

Similarly, solar thermal can prove costly to install with a typical homeowner having to spend around 4000 pounds on a kit but with the obvious advantages of tariff incentives helping to recoup capital outlay along with savings on energy bills. With the introduction of the Clean Energy Cash Back System in April, homeowners looking to make sound investments in their property will be investigating the potential of solar energy for their homes. The downside of new technology of course is the leap into the great unknown with unscrupulous agents, manufactuers and installers looking to capitalise on consumer naivity.

Fortunately solarfeedintariff.co.uk is seeking to make investing in solar micro-generation simpler by offering a quotation service designed to eradicate the need for time consuming market research by offerig the latest, expert advice on the best option for your home. For more information on the solar quotation service, please visit:

http://solarfeedintariff.co.uk/solar-installation/