When thinking about renewable electricity for your home, two options spring to mind; photovoltaic panels and small wind turbines. But which one should you choose? The government has introduced a feed-in-tariff that pays a subsidized amount for the electricity they produce and the amount paid for small wind turbines is similar to that paid for small PV systems (34p/kWh compared to 41p/kWh).

The key criteria to deciding which technology will be the most profitable is the cost of producing a unit of energy from each one. For this you need to factor in the up front costs such as equipment and installation, and then look at how much energy they will produce once out there over an average year. Without going too heavily into numbers my argument is that in some instances, micro-wind turbines will have a lower cost of energy than solar panels, but for the majority of cases solar panels will be better and this can be explained by some basic science.

Without a doubt, on a large scale, wind energy is cheaper than solar. The cost of energy from large-scale wind farms is somewhere around 10p/kWh whereas the cost of energy from large-scale solar is three to four times greater at present. Big wind turbines are now very well designed products and many years of industry development means that the costs have fallen dramatically and continue to do so. Big solar farms are also rapidly reducing in cost and make a lot of sense in some locations, particularly in the many regions where wind farms are not suitable, but for now they do not compete.

On the small scale however, the economics are drastically different. As the size of a solar installation decreases, the performance falls linearly with the amount of area used, and therefore the cost of energy does not change so dramatically. In contrast, as wind turbines get smaller their performance gets disproportionately worse. This is for two mains reasons:

The first reason is that as the turbine blade length gets shorter, the ‘swept-area’ decreases quadratically. This means that if you decrease the length of a blade from 80 meters to 40 meters, the area covered by the blade decreases from 20 thousand square meters to just 5 thousand. The ‘swept-area’ determines how much wind energy the turbine can use. So when you decrease the blade length you still need all the expensive moving parts like the generator, but you get disproportionally less energy – for one big wind turbine you would need thousands of smaller ones to cover the same area. The second reason is that where you use micro-wind turbines the wind speed is generally slower. This is because most of us live in built up areas where there are other buildings nearby. These buildings disrupt the wind, making it irregular and slow. Wind speed is crucial to the effectiveness of a wind turbine, again because the energy contained in the wind is disproportional to its speed. If the wind speed drops by a factor of 2, the energy produced by a wind turbine decreases by a factor of 4. Comparing most built up areas, the average wind speed is much lower than half the wind speed found high-up in open spaces where you find most wind farms.

These two factors combine to mean that for most homeowners solar panels are the most sensible and safest option. Of course, if you live near an open space and get a lot of wind then a micro-wind turbine could be a great investment. However, if you do live near a windy open space, I would suggest trying to build as big a wind turbine as possible, as their cost effectiveness increases dramatically with size.

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…

After the long wait we finally know for sure the amount to be paid to producers of solar electricity under the clean energy cash back scheme. The result of a consultation process lasting 6 months, the initial outlook for solar energy in the UK is positive.

In comparison with the provisional figures released last year, there has been an across the board increase in the generation tariff paid per kWh for all sizes of installations. The table below shows the feed in tariff as they stand now;

There some important new features of the arrangement;

–         The export tariff (the amount paid when energy is fed into the grid) is reduced to 3p/kWh. This will increase the motivation for generators to use the energy for themselves since retail electricity prices are normally significantly more than 3p/kWh.

–         The lifetime of the FIT is 25 years. This is in line with other feed in tariffs around Europe and increases the attractiveness of solar (compared with 20 years) as it increases the security of the investment.

–         The feed in tariffs are linked to inflation. This means payments will increase over time in absolute terms. This is something that we had been campaigning for as ‘inflation risk’ is a significant worry that we have encountered in prospective solar producers.

–         The feed in tariffs can be legally assigned to any party. This allows room for innovative leasing models that are popular in Europe and the US where the either a third party leases roof space or a home owner leases the solar panels system.

Our initial calculations show that this level of tariff should result in 7-8% annual returns for homeowners retrofitting PV systems under 4kW. This means solar will compete with the best investment funds out there for investors pounds.

For Solarfeedintariff.co.uk this announcement represents a positive move by the government. It shows that during the consultation process it has listened to voices in the solar industry (hopefully including ours) and taken note of what is happening in the rest of Europe. Germany has shown that microgeneration, in particular solar PV generation can contribute very significant amounts of the nation’s energy and that a feed-in-tariff is the best way to encourage this growth.

Claims that have recently been made in the press that solar panels are merely ‘eco-bling,’ exhibit complete ignorance of what is happening in the rest of the world. Unfortunately this is a common attitude in the UK, the last major European economy to implement a feed-in-tariff. Hopefully, now with the tariff announced, this will change. We fully expect strong growth in the UK solar industry. This is a good day for Britain and our hopes of achieving our emissions targets.

Stay tuned for more updates.