• Reduced tariffs for over-50kW solar
• Increased support for farm-scale anaerobic digestion

Proposals to reduce the financial support available to larger scale solar-produced electricity have been published by the Government today as part of plans to protect financial support for homes, communities and small businesses.

The consultation follows the launch in February of a fast-track review into how the Feed-in Tariffs (FITs) work for solar photovoltaic (PV) over 50 kW after evidence showing that there could already be 169 MW of large scale solar capacity in the planning system – equivalent to funding solar panels on the roofs of around 50,000 homes if tariffs are left unchanged.

Such projects could potentially soak up the subsidy that would otherwise go to smaller renewable schemes or other technologies such as wind, hydro and anaerobic digestion.

Projections at the start of the scheme had shown no large scale solar under the FITs was expected until at least 2013.

Today’s consultation also covers proposals to provide added support to farm-scale anaerobic digestion given the disappointing uptake of such technologies to date.

Greg Barker, Climate Change Minister said:

“Our cash for green electricity scheme is a great way to reward homes, communities and small businesses that produce their own renewable power.

“I’m committed to an ambitious roll out of microgeneration technologies as part of the Coalition’s green vision of a much more decentralised energy economy.

“I want to make sure that we capture the benefits of fast falling costs in solar technology to allow even more homes to benefit from feed in tariffs, rather than see that money go in bumper profits to a small number of big investors.

“These proposals aim to rebalance the scheme and put a stop to the threat of larger-scale solar soaking up the cash. The FITs scheme was never designed to be a profit generator for big business and financiers.

“Britain’s solar industry is a vital part of our renewables future and our growing green economy. The new tariff rates we’re putting forward today for consultation will provide a level of support for all solar PV and ensure a sustained growth path for industry.

“Taking a pro-active approach to changing tariffs will allow us to avoid the boom-and-bust approach we have seen in other countries and enable us to support more homes and community schemes, and a wider range of technologies such as wind, hydro and anaerobic digestion.”

As solar PV technology has developed, its costs have reduced, and are now believed to be around 30% lower than originally projected. This means the technology does not need as much support to be competitive.

The Government is therefore proposing reducing the support for all new PV installations larger than microgeneration size (50kW) and stand alone installations. The new proposed rates are:

• 19p/kWh for 50kW to 150kW
• 15p/kWh for 150kW to 250kW
• 8.5p/kWh for 250kW to 5MW and stand-alone installations

These compare with the tariffs that would otherwise apply from 1 April of:

• 32.9p/kWh for 10kw to 100kw
• 30.7/kWh for 100kw to 5MW and stand-alone installations

Such changes are in line with amendments made to similar schemes in Europe where in Germany, France and Spain tariffs for PV have been reduced sharply over the past year.

Alongside the fast-track review of solar, a short study has also been undertaken into the lack of uptake of FITs for farm-scale anaerobic digestion. The study suggests that the tariff for this technology is not high enough to make such schemes worthwhile. The proposed new tariffs are:

• 14p/kWh for AD installations with a total installed capacity of up to 250 kW
• 13p/kWh for AD installations with a total installed capacity of between 250 kW and 500 kW

These compare with the tariffs that would otherwise apply from 1 April of 12.1p/kWh for AD up to 500 kW.

Government policy is specifically to deliver an increase in energy from waste through anaerobic digestion, not to promote energy crops, particularly where these are grown to the exclusion of food producing crops. DECC is talking to Defra and others about the best way to implement controls to make sure this does not happen.

The Government will not act retrospectively and any changes to generation tariffs implemented as a result of the review will only affect new entrants into the FITs scheme. Installations which are already accredited for FITs will not be affected. Solar PV installations less than 50kW are not affected by this fast track review.

These changes are proposed to be implemented in advance of the comprehensive review of FITs, which is currently underway and will look at all aspects of the scheme.

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“Solarfeedintariff.co.uk believe the government has made a mistake in reducing their support of the U.K’s solar industry. Solar farms would have brought the country closer to its renewable energy targets much faster and more cheaply than roof top solar alone”

Engensa, a UK based solar company recently installed the UK’s first micro-converter system – a radical new technology that enables millions of otherwise unsuitable roofs to be used for solar PV by eliminating many of the problems associated with shading.

As thousands of families each month install solar PV systems, the crucial role of the inverter – the nerve centre of any system – is coming under increasing scrutiny.

A standard inverter has two distinct roles: the first is to convert the DC current produced by the panels into AC current that can be used in the home.  The second, crucially important, role is to manage the output of each of the panels and this is where traditional inverters can struggle.  The problems come about when even a small part of the installation is shaded by a tree or a nearby building.  Solar cells are essentially large semi-conductor diodes (similar to computer chips) which convert sunlight into electricity and are connected together to make a panel.  When even a single cell within a panel is shaded it limits the current that can flow in the whole system, because with a normal inverter the solar panels are connected in series.  This means that with a regular inverter the entire system performs to the standard of the weakest panel.

As the snows fell before Christmas, Engensa installed the UK’s first ever micro-converter – a radically different kind of solution manufactured by SolarEdge, an Israeli based leader in PV power optimization.

Instead of having a single inverter, the SolarEdge system is made up of multiple PowerBoxes, which sit under each solar panel and maximise the power of each individual panel and communicating this to a central inverter across the existing power lines.  In addition, PowerBoxes maintain a fixed DC string voltage, allowing optimal efficiency of the SolarEdge PV inverter at all times and enabling a significant increase in the amount of electricity generated over the lifetime of the system.

According to Dr. Toby Ferenczi, Engensa CTO, it is ‘the UK’s first of a kind installation with distributed power harvesting.  In plain English that means you get more energy output and greater PV monitoring capability compared with a conventional solar PV system because each panel is controlled separately.’  According to experts at Engensa, this new technology means that the impact of shadows falling on the panels is greatly reduced because only the output of the shaded panels are affected, rather than the whole system.  It also means you can install panels in different orientations giving much greater flexibility when designing the system.  A third benefit is that system owners have much greater insight into how their system is performing since it allows the output of each individual panel to be monitored in real-time, even from an iPhone.

‘SolarEdge’s product is a breakthrough that we have been waiting for,’ says Dr Ferenczi.    ‘Our focus, in the increasingly competitive solar market, is to provide our customers with the best technological innovations from around the world and as part of this commitment we are delighted to have installed the first SolarEdge system in the UK.’

Unfortunately the solar industry is not a level playing field at present.  The Chinese government has provided some enormous loans to their top PV manufacturers (e.g. http://uk.reuters.com/article/idUKHKH00202420100414).  These manufacturers are using the money for incredibly rapid expansion so that they are fast outgrowing all of their European competitors.  Being bigger means they have greater efficiency, which means the large Chinese players now have even lower costs than their foreign competitors.  There are obviously cries from US and German manufacturers about violations of international trade laws etc and indeed the situation is particularly unfair seeing as it was the German FiT that created the Chinese manufacturers in the first place, but there is little chance of any legal recourse in the near term.  The situation has led German policy makers to think about protectionist policies for solar though (‘buy German’) and provided fuel for the anti-solar lobby.

All that aside, the top-tier Chinese solar manufacturers are now producing high quality modules with lower costs than anyone else.  They have had a lot of experience with due diligence from European banks and are now pro-active in respect to quality control and bankability.  They are also beginning to invest heavily in R&D which will close the already small technology gap with Japanese and European competition.  Chinese solar manufacturers are integrating vertically in the value chain in a big way.  This means that for example cell manufacturers are starting to make wafers, silicon and modules etc. This gives them greater ability to control quality and improves margin retention.  They are also expanding downstream and bulking up sales teams in Europe with Europeans. This reduces the ‘fear factor’ of working with Chinese companies and taking revenue away from European wholesalers.  The strength of the big Chinese players is evidently putting a strain on its competition. If one had to choose between German or Chinese manufacturers as the most likely to be around in 25 years it would almost certainly be the Chinese.

It should be noted that there a number of Chinese manufacturers that do not have such high standards and should be avoided.  Many people in the solar industry are not convinced that the UK’s Microgeneration Certification Scheme is effective at weeding out these poor manufactures judging from the companies which have gotten through.  There are also lots of counterfeit modules  on the market now (for example fake Trina Solar and ET Solar modules are widespread) so its important to find installers with good checking procedures.

So does the rise of the big Chinese solar manufacturers damage the UK and make the Feed-in tariffs pointless, seeing as it will support the continued growth of unbeatable foreign competition?  I would argue that the only way to create growth in our manufacturing industry is to develop a domestic end-user market.  For a long time the UK has precious little in terms of PV manufacturing capability, which means that the strength of Chinese companies has little impact on us.  If we were not buying from China, we would be buying from elsewhere.   As the UK market grows, more people become engaged in the industry and start to look at product innovation.  Already there are a number of UK companies developing solar products specific to the UK market as a direct result of the introduction of the Feed-in tariff.

Furthermore, module manufacturing makes up only a small portion of the solar value chain.  Installing roof-top PV is highly labour intensive, and the feed-in tariffs will create a huge number of jobs in the badly suffering building services industry.  The fact that there are good quality, cheap Chinese panels available allows solar PV to be more competitive as a renewable energy source.  Costs are expected to fall rapidly over the coming years (as they have already) meaning that in around 5-6 years time the cost of solar electricity will be at par with retail electricity prices, which means the FiTs won’t be needed anymore.

Another point is that the big Chinese PV manufacturers will start doing the last manufacturing step, module integration, close to their markets.  This is because you can air freight solar cells, but you have to ship finished solar panels because of the glass (regular glass factories normally only serve a radius of 100km).  By doing module integration close to their key markets, manufacturers won’t have working capital tied up for 4 weeks and will reduce the risk of damage in transport.  Sharp already do this with a module integration plant in Wrexham, and we may well start seeing the Chinese companies open manufacturing plants in Europe, even in the UK, over the next couple of years which would provide an interesting boost to UK industry.

Eventually the playing field will level out again – China will get more expensive and there will be space for newcomers with new technologies, but for now the Chinese players clearly have the upper hand.

Farmers and landowners in the South West should think about the opportunities being presented with the growth in renewable energies.

Sonya Bedford, Head of Renewable Energy at Stephens Scown, says as fossil fuels become more expensive and renewable energy gets cheaper, people could earn an extra income off their land, “Maximising land use to prepare for a future without oil is a very sensible thing to do, especially when subsidies are looking more and more uncertain with 2012 looming.”

The main forms of renewable energy are wind power, hydropower, solar energy, biomass, biofuel and geothermal energy.

She adds; “Renewable energy is ideally suited to rural areas and if you’re looking to diversify, mitigate climate change and earn an extra income then renewable energy may be the way forward. With the continuing and growing Government support for renewable energy, this is a development area that farmers and landowners can explore very seriously.”

By the end of 2009, worldwide wind farm capacity had increased by nearly a third during the year and wind power supplied over one percent of global electricity consumption.

Once the renewable infrastructure is built on the land in whichever form is most suitable, the fuel is free forever. Unlike carbon-based fuels, the wind and sun and the earth itself provide fuel that is free, in amounts that are effectively limitless.

Sonya says, “A wind turbine is now a much more common sight than it was and the wind power operators are on the look out for more and more land that is suitable. Landowners have an opportunity to earn additional income for each turbine they have on their land. Wind farms provide landowners with a regular income, generally for no additional labour or expense, usually for a period of 25 years.

The arrival of feed-in tariffs means there may now be profit to be made by generating electricity through photo-voltaic (PV) panels on barns/houses or commercial building roofs – the same can be said for the generation of electricity through wind turbines.

She adds, “More farmers and landowners are choosing to install their own apparatus, rather than relying on the companies to approach them for installation. The effects of increased generation of electricity will also mean that more farms and estates will be able to be completely self reliant when it comes to their energy needs.”

Biomass, another form of renewable energy, is being used by farmers both as a cash crop and to power and heat the farm itself. Biomass fuel can also include sewage sludge and animal manure and can be a useful way of using a bi-product which may otherwise be difficult to dispose of with the increasing regulations.

Hydroelectricity is generated by the production of power through use of the gravitational force of falling or flowing water. Micro-hydro can be cost effective if you have a sufficient flow and head of water on your land.

With the Nitrate Vulnerable Zone designations, the requirement for farms to increase slurry storage capacity over the next few years could mean that farmers look to Anaerobic Digestion (another renewable energy source) as an alternative option for manure management. The gas produced from anaerobic digestion can be used to heat or produce electricity.

Experienced solicitors at Stephens Scown are available to guide and assist you in making optimum use of your land. For more help or advice, contact Sonya Bedford on 01392 210700, email s.bedford@stephens-scown.co.uk or visit www.stephens-scown.co.uk