Posts tagged with: FIT

Last Friday (24th September) news broke on the Coalition government’s decision to back down on their promise of retroactively granting the feed-in tariff to 6000 ‘pioneers’ who installed PV before the feed-in tariff was announced.  This is undoubtedly unfair since those pioneers were responsible for keeping some semblance of a UK PV industry alive in recent years whilst the industry was booming elsewhere in Europe.  In light of the government’s austerity measures however, I do not consider it an outrage that these few people are denied the FiT.  Early adopters of renewable energy are unlikely to be in the lowest paid income bracket and at a time when many public sector workers face redundancy the government can argue that they have more pressing issues to deal with.

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.

Understanding how to design a PV system is not rocket science, but it is more complex than many people consider. Here’s a very quick overview of the important points.

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.

As usual, it seemed that the UK was falling behind competitors from abroad from a reluctance to look to the future and fully back green energy through strong legislation. Solar markets in Spain, Germany and Italy to name but a few in Europe, attracted investment through incentive schemes in the form of feed-in tariffs. With the UK government finally introducing the Clean Energy Cash Back scheme in April 2010, it now appears that the financial mechanism is in place to help UK solar investment catch up with more mature markets overseas.

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.”

If you want to buy a solar panel in the UK and use it to generate green electricity under the UK feed-in tariff, you will have a much smaller range of solar panels to choose from than customers anywhere else in the world. The reason for this is because of a scheme invented by the UK government called the Micro-generation Certification Scheme (or MCS). This benefits and drawbacks of this scheme were discussed in a previous article on this site and now that we are two months into the feed-in tariff it is a good time for a review of the situation.

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.