Solar Feed In Tariff Website

The Chinese National Energy Administration has announced via the state run newspaper China Daily that they will be seeking to produce around 15 per cent of all the country’s energy by renewable means within the next 10 years.

China, despite being criticised for its heavily industrialised, polluting economy and images of Beijing obscured by dense smog during the 2008 Olympic Games, the government is taking proactive steps towards reducing carbon emissions with measures that would shame certain other attendees of the Copenhagen climate summit.

With the growing realisation of the fallibility on basing the huge Chinese economy on fossil fuel imports which could become untenable within the next 25 years, the Beijing government is planning to spend billions of dollars in investing in solar and wind farm sites in addition to research projects which could keep China at the cutting edge of green energy generation.

Renewable energy generation grew by 1 per cent in China in the last 12 months with the government hopeful that figures will grow from the present 9.9 per cent to 15 per cent by 2020. The Chinese government is keen to diversify its economy as well as its means of energy generation with the dual purpose of slowing the effects of climate change and making the economy more robust in the face of any potential fuel crises which could arise in the near future.

In spite of passing legislation designed to have an immediate impact on renewable energy uptake such as the feed-in tariff, a mechanism to incentivise investment in green technologies, government spokesman Zhang Guobao is realistic about the timescales involved in such projects. Speaking to China Daily, Zhang commented that,

“Power projects take a long time to be up and running, and we are basically allowing five years to complete them although it is a 10-year program, otherwise, the facilities cannot be put into use by 2020.”

Zhang added, “It appears that some local governments approved energy-guzzling projects during economic crisis so only by fully implementing our energy saving regulations can we realize economic growth with less energy consumption.”

The winter months have brought lots of snowfalls, or as they are known in the world of solar energy, ’shading events.’ You might be forgiven for wondering what exactly happens to the performance of solar panels when they are covered in snow, or anything else for that matter.

Shading is a big issue for solar arrays. A small amount of shading on one solar panel can result in a big power loss for the entire system. This is because of how they are connected together; a solar panel is made of a number of solar cells connected in series. Each solar cell has a current of around 8 Amps and a small voltage of 0.6V or so when under full sunlight. For those who remember their physics classes from school, this means that when they are connected in series the voltages add up but the current stays equal. Solar panels are then connected together in series to make a string, so the current still stays the same (on large arrays multiple strings are connected in parallel).

What this means is that if one solar panel, or even one cell of one solar panel is affected, it will affect all the others. When a cell is shaded its output current decreases, which means the current for all the other cells and modules is also limited. So one small patch of shade can disproportionately reduce the power output of the whole system.
This effect can be limited by a number of means.

The best way is to make sure your solar panels are not going to be shaded in the first place. This should be checked as part of the site survey, conducted by your MCS accredited installer. You should ensure that nothing will shade the modules during the middle of the day, when your system should be producing the most energy. Shading can be checked using a special design tools that show the path of the sun behind various shading objects. This can be either a lens that shows the horizon and path of the sun in front of you, or a full design software package that uses photographs of the surroundings.

With snow it does help to clear it off. But there isn’t usually much sun when its snowing, and if the sun does come out, the snow melts pretty quickly.

If you cannot eliminate shading as is often the case in built up areas, there are several technologies that can limit the effect of it. Many solar panels now include bypass diodes that disconnect groups of solar cells if they are shaded. It is fairly crude but often works well. When you buy solar panels make sure to ask about bypass diodes.

A second technology that is not available yet in Europe but soon will be is distributed conversion. Here, rather than have power electronics (like the inverter) positioned all in one place, you have some electronics placed on each module. This allows each module to operate independently. One company in the US called Enphase claims this technology increases power output by upto 25 percent.

These are all things to bear in mind when buying a photovoltaic system.

In a bid to prevent a shortfall in rate payments for pioneers in small scale renewable energy investment, Good Energy has promised to continue to pay its generators 15p /kWh rather than the 9p / kWh set out in the recently announced tariff legislation.

Good Energy, dealing solely in renewable energy has announced that the government’s recent tariff scheme would harm their so-called ‘pioneer’ generators who installed their renewable technology before the cut-off date of July 15, 2009. Under the new tariff regime to come into effect in the Spring of this year, these pre -July 15 customers would only be eligible for a 9p/kWh payment for units of renewable energy compared to a payment of 41.3p/ kWh for installations after this date.

In a bid to keep pioneer installors viable until when they hope the government will amend their pre July 15, 2009 rule, Good Energy will continue to pay these generators the previous 15p/kWh rate. Currently, Good Energy sees itself as a market leader in renewable energy uptake incentivisation and wants to continue awarding attractive incentives for smale scale installors of renewable energy technology. Leading the way in 2004 with their renewable energy incentive scheme HomeGen, Good Energy believe that the government’s scheme is treating long term micro-generators unfairly.

CEO of Good Energy, Juliet Davenport, announced:

“It’s outrageous that the new FiT only pays the highest reward to new generators – Good Energy believes that the early adopters of microgeneration technology should also be recognised for their pioneering attitude and taking a lead.

That’s why we’ve decided to continue paying our existing accredited HomeGen generators 15p a unit for all the electricity they generate and lobby to change the government’s mind.

It’s outrageous that the new FiT only pays the highest reward to new generators – Good Energy believes that the early adopters of microgeneration technology should also be recognised for their pioneering attitude and taking a lead. That’s why we’ve decided to continue paying our existing accredited HomeGen generators 15p a unit for all the electricity they generate and lobby to change the government’s mind.”

Solarfeedintariff.co.uk Needs You!

In our efforts to become a better information resource for people interested in the UK’s upcoming feed-in-tariff, we are looking for contributions from our own readership. Do you have experience with solar energy that you would like to share?

Perhaps you recently had a micro-generation system fitted and have inside information on what it really takes and what the benefits are?

Do you work in a field related to the feed in tariff? If so, and you would like to share your views, then please contact us at enquiries@solarfeedintariff.co.uk.

We are looking for articles of around 400-500 words, and these can be published anonymously or not, depending on your preference. We cannot promise to publish all articles but will do our best. You can also let us know beforehand if you would like to write something and we will provide some early feedback.

Thanks for your help and support!

The UK feed-in-tariff announcement has generated a lot of interest in solar energy for homeowners. But what of the interest for organisations such as farms, businesses or local communities?

Some in the press have criticised the government’s proposed feed in tariff plans because they do not offer specific incentives to businesses as well as private individuals.

I would argue that the feed in tariff as it stands applies equally well to enterprises as it does homeowners. Businesses are often able to think longer term about investments. The incentives for installations above 50kW are still attractive for commercial roofspaces, especially if businesses use the electricity they generate for themselves, meaning that installing solar would be a prudent investment to have on a balance sheet. That is not to mention the kudos that comes with being a net exporter of green electricity.

In Germany the commercial rooftop segment of the market is the largest by volume, and with a feed in tariff pricing that now looks rather similar to the UK’s. We may therefore expect that companies start to explore using their roof space for PV. In fact if they haven’t thought of it yet, someone else will soon be approaching them with an offer.

That’s not to say the governments plans are flawless however. The UK is still pitifully behind the rest of Europe when it comes to renewable energy generation and particularly microgeneration.

Still lurking in government policy the ridiculously low target of 2 percent of energy coming from microgeneration by 2020. This is incomprehensible given that Germany is already at 4 percent from solar and other countries like Denmark with biomass gain nearly 40 percent from microgen. Surely this target must be revised!

Speaking as a professional in the global solar industry, the new UK feed in tariff has put us on the radar (a bit). Rather than smirking when I mention the potential for solar in the UK, my colleagues are now starting to take some interest…

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.

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.

This week the economist published an article criticising the German feed-in-tariff. The article wasn’t totally atrocious and it highlighted some of the current issues facing the German solar market. However it did leave out some key points that would have changed the articles’s conclusion. Being a fan of both the Economist and the feed-in-tariff I had to respond.

In addition, although I didn’t mention it in my response as I hate nit-picking, the author made a factual error by implying that the solar panel’s made by First Solar incorporate silicon. Since the key differentiator of the world’s largest solar manufacturer is that they don’t use silicon, this error raises doubts about the author’s level of expertise or research.

You can read the article using this link and my reply is shown below.

http://www.economist.com/businessfinance/displaystory.cfm?story_id=15213817

My response:

Sir,

Whilst your article makes some valid comments, it misses two key points.

Firstly, according to the Bundesnetzagentur (Germany’s grid regulator), large utility-scale photovoltaic installations accounted for fewer than 20% of the solar market in Germany in 2009. The rest of the market is made up from smaller rooftop systems. This is not the case for wind energy (since their performance decreases disproportionately with size). This means photovoltaic installations compete for the retail electricity price rather than the wholesale electricity price. Since retail prices can be four times greater than wholesale ones, solar energy has an easier cost target than wind energy.

The second point is that the cost of energy from photovoltaic systems is predicted to decrease at a faster rate than the energy from wind turbines. The basic components that make up a wind turbine have been costed-out for far longer than those making up a solar installation. According to the European Photovoltaic Industry Association, economies of scale and technological innovation will bring solar energy to cost competitiveness with regular grid prices by the middle of this decade, including in cloudy Germany. This means the end of subsidies is well-within sight.

It is clear that the German solar market became overheated in 2009, and in fact many within the industry have themselves called for the feed-in-tariff to be reduced faster than originally planned. However considering the above factors, alongside the fact that many of the world’s leading solar companies are German as a result of subsidy, Germany’s pioneering feed-in-tariff should be considered a resounding success.

‘Where should we put solar panels anyway?’ This is a question I’m often asked and to which I always reply, ‘everywhere!’ Glibness aside, what the question is usually getting at is to do with market segmentation. There are many different types of photovoltaic (PV) installations. One of the remarkable aspects of solar technology is just how scalable it is. Solar panels are used in both pocket calculators and in giant solar farms covering hundreds of hectares. The economics of each application are very different however and it is important too understand which applications represent the largest markets.

As I’ll discuss the, UK feed in tariff is designed to strongly influence the type of solar installations built in the UK, but what kind of solar installations are best and what should we expect in the UK?

Let’s look at what’s going on in other countries around the world. In Germany, the world’s biggest solar market by far this year, grid-connected solar systems are defined in three categories; residential, commercial and utility scale. Residential scale is the smallest type of installation and refers to all installations less than 10kW (~60m2) typically found on private houses. Commercial scale refers to installations between 10kW and 100kW (600m2) typically found on the roof of a factory, office or warehouse. Utility scale refers to all installations above 100kW and these are typically ground-based installations on fields (also known as solar farms) and can cover hundreds of hectares.

These three types of installation are quite different from each other in terms of price and the technology used. Which type of installations are the most popular? Figures published by the Bundesnetzagentur (the German grid regulator) state that the market in 2009 is divided into 17% in the residential scale, 17% in utility scale and 66% in commercial scale. This means that because residential installations are smaller, there are many more of them in number than utility scale installations.

Large plants are cheaper due to economies of scale, however the planning process can be long and complex, and it can be difficult to find banks willing to loan money for such projects. Rooftop plants on the other hand have a much easier time getting planning permission, and often are fully funded by the owner, so don’t require a loan. This explains why commercial scale rooftop plants dominate the market.

In the US, rooftop installations also dominate, and there is an additional reason why. In the US there is no feed-in-tariff, rather a complex array of grants that vary from state to state (California has the best).

Solar installations generate money by selling electricity to the energy utility at the regular unsubsidized rate. This means if you generate energy at the place where you use it, you get the same price of electricity that you would have to buy it at, the retail price. On the other hand, if you have a utility scale power plant, this requires the utility to distribute the energy for you and you only get the price that other types of power stations get, the wholesale price. Since wholesale electricity prices are roughly half that of retail electricity prices, its much better to have a solar installation in the same place as where you use it, i.e. on your roof.

So what does this mean for the UK? Well, as we are led to believe from the governments initial announcement, the UK feed-in-tariff will be strongly weighted towards smaller installations. This means that the larger your installation the less you will be paid for the electricity it generates. This cutoff is quite severe, with the rate dropping from 36p to 31p per kWh for installations over 4kW, to 28p for installations over 10kW and down to 26p for installations bigger than 100kW.

The argument behind this is so that all installation deliver an equal return on investment. This implies that the government assumes the cost of energy from a solar installation is 14% lower for a 5kW installation than for a 4kW installation.

Where does this assumption come from? Data from Germany suggests that this is not the case and the 14% drop does not exist. Cost of energy does fall with increasing scale but by how much is unclear and changes constantly with prices of various technologies.

I can understand if the government wants to ban solar farms (although having visited several under construction in Germany last month I think it’s a real shame that we don’t have a single solar farm in the UK, even just from an educational standpoint) but the current FiT structure does something else. It restricts the most effective type of photovoltaic installation, namely commercial scale rooftops.

Germany’s flat feed-in-tariff structure and the US’ grant scheme both allow the market to evolve naturally. If large rooftop installations make the most sense economically then why not let this segment grow fastest? Trying to engineer a feed-in-tariff so that everything grows at the same speed will inevitably slow growth overall.

Let’s hope changes are made while there’s still a chance.

Consultants Ernst & Young have released their annual global renewable energy country attractiveness indices with the big news being that China has knocked Germany from its number one spot, a position which they have enjoyed for the last seven years. The report indicated that in the lead of attractiveness are the US and China followed by Germany, India and Spain.

With various leading economies around the globe vying to become leaders in the renewable energy sector the Ernst & Young indices provides a tangible demonstration of how attractive the competing markets are to investors based on the measures taken by the respective governments. The commitments by the Chinese government to slow climate change through the reduction of carbon emissions has certainly been reflected in their rise in the investment indices.

Once the pariah of the international community with regards to fighting climate change, the Beijing government has demonstrated through legislation that they have a very earnest desire to slow the effects of climate change.

Recently the Chinese government announced 1.8 GW of solar installation throughout the vast country with investment incentivisation coming in the form of the Golden Sun subsidy scheme designed to transform the Chinese solar market from a purely manufacturing base into a world leader in solar PV installation. This, the report indicated was the key feature in China moving up the table from sixth place in 2007 to the joint number one position enjoyed today.

The report will come as an early Christmas present for the nations perched in the top 5 positions as it gives investors a comprehensive assessment of the most viable markets in which to invest based on criteria such as existing infrastructure, incentives and location benefits.

With the success of China as a potential solar PV market, analysts in the UK will not have missed the direct correllation between government action and market attractiveness, something which the report explicitly highlighted. The UK enjoyed limited success, moving up one point to sixth, an increase based on limited government action taken so far in the form of the creation of the Department of Energy and Climate Change (DECC), the introduction of the Energy Act in November 2008 and the recent announcement of the Clean Energy Cash Back system, essentially a feed-in tariff to be introduced in April 2010.

The UK’s position of sixth could be bettered by the next indices published by Ernst & Young at the end of 2010 but will depend greatly on the initial successes of the UK market in the light of the newly implemented tariff system. At the present moment members of the lobby group We Support Solar are arguing that the UK government will have to increase the tariff rate if the UK is to compete with the emerging solar tiger economies with manufacturing bases much closer to home.

For more information on the Ernst & Young global renewable energy country attractiveness indices, please visit:

http://www.ey.com/Publication/vwLUAssets/Industry_Utilities_Renewable_energy_country_attractiveness_indices/$file/Industry_Utilities_Renewable_energy_country_attractiveness_indices.pdf