Feed-In Tariffs - Making sunlight a cash crop - Philip Wolfe (Ownenergy)

Feed-In Tariffs
Making sunlight a cash crop
Philip Wolfe

Feed-In Tariffs - how to benefit
Feed-In Tariffs (FITs) - the fundamentals
Tariff levels for PV
Who gets the cash & where it comes from
How to ensure FITs work for your farm
13th October 2010
Sunlight cash crop through Feed-In Tariffs - Philip Wolfe
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The UK’s Feed-In Tariffs
The three main value streams
Generation tariff
Savings on imported energy
Export bonus
Eligible technologies and tariffs
Administration
Renewable Heat
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The 3 main value streams
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Total benefit to owner =
Generation tariff +
Saving on reduced imports +
Export bonus
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The Generation Tariff
Paid for every kWh generated;
whether used by the system owner
or exported back to the grid
Level depends on:
The renewable energy technology
The capacity of the system
The date of installation
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FIT Eligible technologies
Biogas from anaerobic digestion
Hydro-power
Solar photovoltaics
Retrofit in existing property
New-build (properties not yet occupied)
Stand-alone (systems for pure grid-feed)
Wind power
Micro-CHP (non renewable)
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Eligible capacities
The FITs cover installations up to 5MW
Except Micro-CHP only up to 2kW
The tariff level depends on:
So-called ‘Total Installed Capacity’
The capacity is per ‘site’
Additions based on cumulative capacity
Installations must be accredited
Systems under 50kW – MCS
Systems over 50kW – ‘ROO-FIT’
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Ineligible installations
Other RES-E technologies:
Biomass, geothermal, tidal, wave, biofuel
Hopefully to be reconsidered on review
Systems over 5MW
Second-hand and refurbished systems
Pre 15th July ‘09 installations
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FIT tariff levels
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PV

The Export Tariff
For every kWh exported to the grid
The beneficiary gets the generation tariff
Plus a premium for export, as follows
A fixed rate of 3p/kWh has been set
But you can opt out and negotiate
a better price from an electricity supplier
Opt-out decisions can be made each year
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Duration of tariffs
Tariffs are fixed for 20-25 years
Except micro-CHP for 10 years
PV is 25 years all others are 20
Tariffs are index-linked to the RPI
Both generation and fixed export tariffs
New rates will be announced annually
For new installations tariffs change:
Subject to degression
Maybe at reviews (5-yearly from 2013)
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Tax treatment
Householders don’t pay Income Tax on
The generation nor the export tariffs
... provided that it is for
“households who use renewable technology to generate electricity mainly for their own use”
Business has no special tax exemption
but can offset costs against profit as usual
No Enhanced Capital Allowances for PV (yet)
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How the tariffs were set
To achieve an “average 5-8%” return
Would equate to roughly 12-year ‘payback’
We find that typical systems:
Recover their costs ~ twice over the period
That is equivalent to a 12-year payback
We find that the best systems:
Recover their costs 2½ to 3 times
Equivalent to less than 10-year payback
Index-link & tax break improves all this
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Where the money comes from
The scheme is set in law, but
The government doesn’t pay for it
It comes from a levy on electricity bills
It’s collected and paid out by suppliers
Who have a ‘levelisation’ system to share the costs fairly between them
It is now part of their licence conditions
Only small suppliers can opt out
Others are called ‘FITs licensees’
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Who the money goes to
The beneficiary is the system owner
He can specify a ‘nominated recipient’
to whom is tariff payments can be made
He nominates (and can change)
which FITS licensee will pay over the tariff
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Scheme administration
Scheme is administered by Ofgem, who
Maintain the register of FITs installations
Oversee the levelisation process
Accredit systems over 50kW
Have issued guidelines on how it works
For more details:
www.FITariffs.co.uk
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Issues with the FITs
Public awareness
Little government promotion
Consenting
Small systems ‘permitted development’
Larger developments less certain
Tariff levels
Financing
No official finance available
Finance providers’ knowledge; conditions
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Project-specific issues
Maximum capacity 5MW
Accreditation required
Pre-accreditation under ROO-FIT?
Must use conforming meter
Selection of ‘FITs Licensee’
Use of nominated recipient
Timing: Degression; seasonality
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Ownergy Plc
Your renewable energy and tariffs expert
Advise you in selecting the appropriate options
Design and procure suitable systems
Structure projects for financing
Supervise installation & commissioning
Register and manage the tariffs
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Government growth forecast
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kW
kW
kW
Expected numbers of installations by size Source: DECC

PV FITs installations to date
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Gross installed capacity to 2009 = 32 MW!

One of UK’s first solar parks
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AD

One of UK’s first solar farms
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All this assumes ...
... that the Government doesn’t tinker with the tariffs in the present Spending Review
They shouldn’t (it isn’t public spending)
But just to be sure; sign up at:
wesupportsolar.net
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Any questions?
Websites
About the Feed-In Tariffs:
www.fitariffs.co.uk
About the Renewable Heat Incentive:
www.rhincentive.co.uk
About Ownergy:
www.ownergy.co.uk
Feed-In Tariffs
Philip Wolfe
13th October 2010
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Feed-In Tariffs - Making sunlight a cash crop - Philip Wolfe (Ownenergy)

by Farming Futures on Oct 15, 2010

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