The court agreed that proposals to cut feed-in tariff payments for any solar scheme completed after 12 December – 11 days before the official consultation closed – were unlawful.

Friends of the Earth is urging the Government to come up with a new proposal which would allow solar payments to fall in line with reduced installation costs, while ensuring the solar industry continues to play a key part in developing a cleaner future.

The environmental campaigning charity is also calling for more money to encourage solar installations – paid for by the revenue the industry raises for the Treasury, the removal of planned restrictions that would prevent poorer households from installing solar panels and more support for community-owned schemes.

The Government’s own independent advisors say the economy must be weaned off of increasingly expensive fossil fuels like gas by investing in clean energy and slashing energy waste. Friends of the Earth’s Final Demand campaign is urging the Government to launch an investigation into the role of the Big Six energy firms in stopping people in Britain having energy we can all afford.

Friends of the Earth’s Executive Director Andy Atkins said:

“These botched and illegal plans have cast a huge shadow over the solar industry, jeopardising thousands of jobs.

“We hope this ruling will prevent Ministers rushing through damaging changes to clean energy subsidies – giving solar firms a much-needed confidence boost.

“Ministers must now come up with a sensible plan that protects the UK’s solar industry and allows cash-strapped homes and businesses to free themselves from expensive fossil fuels by plugging into clean energy.”

“Solar payments should fall in line with falling installation costs but the speed of the Government’s proposals threatened to devastate the entire industry.”

To read the full article, click here.

The Feed-in Tariff Review

As we understand it, the Comprehensive Spending Review championing the government’s budget overhaul into spending includes a review of the solar FiT. The Department of Energy and Climate Change (DECC) is the authority on this matter, and only their official release will bring about the changes and outline to what extent cuts will be made.

One thing that figures from Ofgem are highlighting is that installation rates are much higher than what they anticipated. The current rates cannot be sustained at this exponential growth level. The boom is most certainly in full swing, and the bust now appears to be approaching in all its foreboding and unstoppable glory.

“Unless Earlier Action is Deemed Necessary”

The DECC, in speaking with industry sources has released the following statement:

“As we’ve previously said, all tariffs in the scheme are being considered in the Comprehensive Review and we will be consulting on proposals later this year. We’ve made clear that tariffs will remain unchanged until April 2012 unless the review indicates the need for greater urgency. There has been no announcement about the review so any rumors about its content are just that, rumours and speculation.” (Source)

In simple terms, nothing has changed at this point and we are no closer to understanding exactly when they will. The media storm has cracked through the sky, but the underlying realities of our situation remain. There is little doubt that the review will decrease the FiT rate by some extent, and also increasingly less doubt that the changes will be brought about before April 2012.

The only concrete truths the industry has to offer are that if you’re installed prior to the changes you will receive an enviable rate on your solar power for many, many years. If you do not, you won’t.

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: 0844 567 9835

© Solar Selections Pty Ltd 2011

The Comprehensive Spending Review

The government carried out what they called a Comprehensive Spending Review in 2010 in order to take better control of government spending. The Comprehensive Consultation into the Feed-in Tariff was a part of this review, and is the official name for the solar FiT review. It is carried out to ensure that the funding being spent to promote the uptake of solar energy installations via the FiT is under control and at a manageable level.

Expectations

International experience has taught us a lot when it comes to government incentives for renewable energy installations, especially solar power on a micro-generation (>50kW) level. The most successful solar industries in the world of Germany, Spain and Japan are perfect examples of this and we can review their developments to aid our predictions. In all of these countries:

1. FiT’s were introduced and subsidised by the government to bring in solar uptake;
2. Reviews on the FiT’s were carried out on loose timelines to control the government’s spending;
3. The FiT’s were reduced over time and via these reviews in order to stabilise growth.

So by this example we can make one point clear;

1) A reduction in the FiT is by far more likely to occur than an increase or a continuation.

The second aspect we must consider is the degree of reduction we could expect to see.  At this point, it looks likely that the UK’s FiT reviews will be flexibly carried out to ensure the government reduces their risk in over-spending via the Comprehensive Consultation they have established. Whilst we have a rough date in mind, we need to analyse the uptake figures for a better idea on when to expect the changes.

Installation Figures of Solar Energy in the UK

The timing of the review

The government has stated that a review will take place upon a certain budget for the FiT being reached or if we reach March 31, 2012. Looking at the current uptake figures being offered by the regulator for energy in the UK, Ofgem, we can expect to reach 550MW before March 2012. This would very likely be a number surpassing the government’s budget, and we can then loosely establish our second important point,

2) The FiT review is likely to be introduced after November 2011, but before the end of March 2012.

Whether changes are brought about immediately or postponed until April 1st, 2012 is uncertain and depends on the government’s perception of the uptake and budget. Here at Solar Selections all we suggest is for people to educate themselves on their options, ensure they understand the returns and benefits for the solar installation and then proceed as soon as they feel comfortable.

The scale of the review

The other important aspect of the review when it does come around is the scale of the reduction in the FiT to expect. The growth of the market here in the UK is not expected to be sustainable for another year, so reductions between certain percentages can be expected.

3) The FiT cuts could be in the vicinity of 25% to 40% of the current tariff levels.

Only a cut of this magnitude could stabilise the spending that is at the forefront of the governments concern. Whilst such reductions would be damaging to the growth of the industry, they do serve as incentive for people to consider their options now and sign up for the 25 year indexed to inflation rates on offer.

The most important consideration with these three conclusions is that time is of the essence. We here at Solar Selections do not condone the pressured selling tactics that can be used in the industry to make customers feel forced into a decision without doing research. We do want to ensure that as part of a potential solar energy customer’s education they learn that if the review is changed and the installation incomplete, the new tariffs will apply and that they are likely to be significantly less attractive than what is available now.

In Conclusion, once a project’s feasibility and interest is established, any further delays in the decision making process serve only to expose the project to the risk of lower tariffs.

To establish your project’s feasibility and your own knowledge and interest, get in touch with us today for free, intelligent advice.

For the full article, please click here

Written by Jarrah Harburn

jarrah@solarselections.co.uk

T: : 0844 567 9835

© Solar Selections Pty Ltd

Energy and Climate Change Minister Greg Barker said, “I want to drive an ambitious roll out of new green energy technologies in homes, communities and small businesses and the FiT scheme has a vital part to play in building a more decentralised energy economy.

“We have carefully considered the evidence that has been presented as part of the consultation and this has reinforced my conviction of the need to make changes as a matter of urgency. Without action the scheme would be overwhelmed. The new tariffs will ensure a sustained growth path for the solar industry while protecting the money for householders, small businesses and communities and will also further encourage the uptake of green electricity from anaerobic digestion.”

The new tariffs (below) will go ahead from August 1, 2011 and will apply to all new market entrants.

>50 kW – ≤ 150 kW Total Installed Capacity (TIC) - 19.0p/ kWh
>150 kW – ≤ 250 kW TIC – 15.0p/ kWh
250 kW – 5 MW TIC and stand-alone installations – 8.5p/ kWh

This effectively writes off large scale solar in the U.K. For a government that is attempting to be green this is a huge step backwards.

Greg Barker has ensured that for the same cost there will be less green energy produced. Here at solar feed in tariff we believe this is a terrible move for U.K policy.

What is concerning however, are unconfirmed reports that the government is thinking of changing of lowering the feed-in tariff before April 2012.  This would be extremely unwise.  Feed-in tariffs are a success because they offer investors (whether banks or families) some foresight as to how much they stand to make. Solar panels are very much a long-term investment, and feed-in tariffs work because you can predict how much you will earn in year 25 of the investment as well as in year 1. Therefore, by changing the planned feed-in tariff degression schedule at short notice, investors lose confidence very quickly. How can a homeowner plan to have a PV installation when the feed-in tariff could be lowered in a month? How can a PV installation company forecast its installation schedule and hire someone if the feed-in tariff is to be changed next month?

Feed-in tariffs are designed to be significantly reduced every year – that’s to reflect decreases in the installed cost of PV systems and ensure that investment returns remain broadly consistent. Everyone knows that the feed-in tariff in the UK is due for its first degression in April 2012, but suddenly changing that schedule will disrupt innumerable business plans and threaten jobs. The feed-in tariff is designed to be decreased, I have absolutely no problem with that, in fact it probably didn’t need to be as high as it is to start with. The problem is only with unscheduled decreases as these cause havoc with the industry.  The UK already has an extraordinarily tiny PV industry in comparison with other major European countries.  By threatening to deviate from the planned degression schedule only 4 months into the scheme threatens to de-rail the beginnings of an industry that could employ tens of thousands of people in the UK.  Already this year the number of installations has dramatically increased as a result of the feed-in tariffs. However, the UK is forecast only to install around 15MW this year. This pales in comparison to Germany’s expected 8GW – its a factor of 500 difference!!

It is possible to build in flexibility into a feed-in tariff policy that controls market growth without causing surprises. In Germany, the annual feed-in tariff degression is now tied to the market size in the previous year. That means if the market is over a certain size then the degression will be more than normal, and if the market is smaller than targeted the decrease for next year will be less.  The UK government have not said anything about their intentions for April 2012. They would be well advised to start thinking about it now, rather than waiting until the last minute as they did before the feed-in tariff was introduced.  Using the German model, feed-in tariff policy could be set until the next general election, this would stand the UK in good stead.

No-one wants a boom-and-bust industry. The UK government should take measures now to reassure the industry that it is following an organised and planned strategy.  Rumours of sudden changes, whether real or imagined, could do more damage than many realise.

Solar panels produce direct current (DC). This means you need an inverter to turn that electricity into mains frequency alternating current (AC).  Inverters come in a range of power ratings. The more solar panels you have, the more power the inverter has to deal with, so the size and cost increases. It’s very important to match the size of the inverter to the number of solar panels.

If the inverter is too small, you will lose out on some of the energy that your system produces. If it is too large, the inverter may not perform at its optimum efficiency, and you will have paid for more than is necessary. In the UK, the optimum situation is to have an inverter that is rated at 80% of the power rating of your PV system, since it is rare you will be producing at 100% power.

More critically than getting the power right, you need to ensure the voltage and current of your solar panel system remains within the input range of the chosen inverter. To re-cap, solar panels on your roof are generally connected together in series, in a ‘string’. This increases the system voltage, but does not increase the current. Once a certain number of solar panels have been connected in series, the voltage will become too high and the system needs to be arranged in two strings, each of the same number of panels, connected in parallel. This generally occurs after a string exceeds 8 – 11 solar panels. When strings are connected in parallel, the currents add-up, but the voltage remains constant.

By adding more and more strings in parallel, the current and voltage can be controlled to remain in the inverter limits. For large solar installations, inverters can used that that have a very high power capacity, or alternatively it is possible to use many small inverters connected in parallel.

It is important to remember certain constraints. Inverters come in several sizes, but there may be some numbers of solar panels for which no inverter is ideal. For instance, because it is necessary for all stings to be equal in size, you can only use an even number of solar panels when using multiple strings. In addition, all solar panels must receive the same amount of sunlight when connected to the same inverter. It is no good to have some solar panels facing different directions on different parts of the roof. New technologies, soon to become widely avaialable that will make this process much easier. Namely micro-inverters, which convert DC to AC at every solar panel, will mean that solar panels can face different directions, however these are not yet widely available.

If you have a sales visit from a solar company, make sure the salesman understands these points as he’s designing your system.

According to many within the industry, the UK now has everything in place to become a player in the global solar market.

“The UK market for solar PV is growing explosively. This is because the FITs [feed-in tariffs] bring a huge new raft of players – the energy users – into the market; broadening it way beyond the traditional energy industry. All renewable power sources are benefitting, but solar is doing best because it is so easy to apply,”

Commented Philip Wolfe, Director of Ownenergy and leading exponent of feed-in tariffs.

With the tariffs working as a means of incentivisation for investors who were once reluctant to invest in what was once an extremely expensive field, the tariffs offset costs and greatly improve the attractiveness of green energy investments. In all countries where tariffs have been introduced there has been a massive uptake in investment with individuals keen to take advantage of legislation-protected investments with healthy ROIs.

With regards to potential for the solar PV industry, Edwin Koot CEO of Solarplaza stated that,

“Having experienced the benefits that FITs have to offer, European countries are now looking to capitalise on the emerging UK market. We can already see signs of this happening for our upcoming UK PV Conference: where 67% of delegate registrations are from international companies, compared to just 33% from the UK.”

However, warning that in the current climate the UK solar PV industry is unlikely to achieve overnight success, Clive Collison of South Facing said,

“It will take time to develop the UK market. Currently there is a lack of knowledge so education of potential customers and businesses is needed. Right now, very few people understand the feed-in tariff system and the opportunities to their full extent.

It took Germany, Spain and Italy three years after the start of their feed-in tariff to reach a substantial market scale. No doubt a similar market development will occur in the UK. That is why conferences like the UK PV Conference are important, to educate the business community and customers and build the business infrastructure. There will be plenty of business for everybody.”

There are more solar panels to choose from now than there were two months ago, however there is still a very restricted choice with some major solar panel manufacturers missing from the list. This can only hurt the UK industry. At a time such as now, when the industry is going through an unprecedented boom, customers need as much competition in the market place as possible. Such restrictions are dangerous as they can lead to inflated or irregular pricing. Europe as a whole is experiencing high volumes of demand at present (largely driven by Germany) which is causing equipment shortages and long lead times. We have seen evidence that the MCS restrictions are exacerbating these problems as there is a much smaller number of available suppliers to choose from.

Some of the stated aims of the MCS process are valid. I am very much in favour of protecting consumers from low quality, inferior products. The question remains is how much does MCS add on top of the existing international accreditation bodies for solar panels such as IEC and UL. These bodies are represented by committees with decades of experience in solar panel reliability testing who spend a huge amount of time developing new ways to prove reliability.

MCS accreditation requires visits from MCS inspectors who ‘inspect’ a manufacturer’s facility before their solar panels can be given the green light. Nowhere is it written who these inspectors are and what their qualifications might be to do this above and beyond IEC or UL testing.

Looking at the current list of MCS accredited solar panels it is difficult to see on what criteria certification is being given. Some large very high quality manufacturers are missing, whilst some small, unheard of manufacturers are already there.

I have heard from colleagues in the industry that administrative and beaurocratic issues are currentls holding up a large number of MCS applications and that a raft of new solar panels will join the list soon. I hope this is the case, and I would encourage anyone with more information on the issue to contact this site. My message to the organizers of the MCS process however, is to put more effort into not damaging the industry that it is designed to support.

Since then however, signs have been emerging that there is an ever increasing wave of companies entering this market, and that solar energy in the UK is getting interest from international investors.

As you may well be aware, qualifying for the feed-in tariff requires an MCS accredited installation company. Newly qualified installers have been added to the MCS list every day since April now and the range of companies now offering MCS solar installations is very broad. Some companies are one man, local electricians whilst at the other end of the spectrum are large energy companies such as E.On with thousands of installers, there is a large choice for those wishing to have solar panels installed.

One trend to look out for is the increasing number of professional investors who see an opportunity to make money from the feed-in tariff. By paying for a solar installation on a rented roof or field, investors can have access to the feed-in tariff revenue. Owning the PV system can provide up to 10% annual returns over a 25 year period with a high level of security.

Quite how these arrangements will work is not yet clear. There are a number of ways the contracts between the investor and property owner can be written, and great care to needs to be taken to ensure that all liabilities are covered in the case of a property sale or an accident. Despite this, a number of companies are exploring this type of agreement for the UK, which is already very common in the rest of Europe.

For land owners or property owners with suitable roofs, leasing space for solar panels can be a very attractive option. It requires no upfront investment, generates significant revenues, carries little risk, and improves the environmental credentials of the building. A property owner might earn more money if they own the solar system themselves, but that would require significant initial capital expenditure, something which many companies may not be able to afford.

The feed-in tariff is obviously very attractive to investors as there is little risk. Once you are in the scheme, the payments are guaranteed for 25 years. Photovoltaic systems are generally reliable, so long as you use good quality products. Solar panels are guaranteed for 25 years (to 80% of their power production) and inverters usually for 10 years (you should expect to replace an inverter at least once in the lifetime of the installation). Other than this, the only risk is that the sun will stop rising each day, and if it did, you’d have something a bit more serious to worry about than your profits…

If you would like to invest in a photovoltaic system, or have a suitable roof that you would like to rent, you can contact us for more information.

The scale of activity means that Germany’s dominance of the world solar market remains. In 2009, over 60% of the world’s solar panels were installed in Germany and it is likely that this trend will continue in 2010. This is having a big impact on markets in the rest of Europe. There is currently an extreme shortage of inverters for commercial and domestic rooftop installations and there are also reports of shortages of solar panels from the leading manufacturers.

This shortage is being felt across the UK PV industry. As demand in the UK steadily grows, installers are finding it more challenging to source the right products in a short time period. Many installations are being carried out without an inverter, meaning that customers are forced to wait several weeks for the inverter to arrive and they can start collecting the feed-in tariff. If you are considering getting a PV system for your home then make sure to ask your installer about their lead time for products.

Fortunately there should be an end to this shortage. The inverter manufacturers have been working very hard to increase manufacturing capacity, and some of that new capacity should be coming on-line later in the year. After the feed-in tariff change in Germany in July demand is expected to reduce to some extent which should free-up availability for the rest of Europe. SMA, the world’s leading manufacturer of inverters with a market share of close to 40% are expected to resolve their supply issues by the end of the summer, meaning that their highly sought after small inverters, the SunnyBoy series, become significantly easier to come by.

This will be important for the UK. Prices of PV systems in the UK are still significantly higher than in the rest of Europe. The shortages prevent new wholesale distributors from entering the market and keep costs high. As the market becomes less supply constrained we expect that the industry will become more competitive, allowing an advancement in price reduction. With the great feed-in tariff we have now, any cost reductions mean better returns for the customer, and will hopefully motivate more people in the UK to ‘go solar.’