[ Spotlight: Commercial PV ]
rules, many potential clients have become confused about commercial PV.
Table 1: Expected PV tariffs (FITs)* Band (kW)
≤4kW (retrofitted or new buildings)
>4-10kW >10-50kW >50-100kW >100-150kW >150-250kW >250kW-5MW
Generation tariff (p/kWh) April 2012 (to July 2012)
21.0 (previously 43.3) 16.8
15.2 (previously 32.9) 12.9 12.9 12.9
8.9 (same as previously)
In addition to some very visible ‘green credentials’ there are several financial reasons to run the rule over PV: 1) PV installation costs, and notably PV panel prices, are still falling (they fell by around 30 per cent in 2011). Having set up lucrative PV businesses, installers are now accepting smaller margins to compete in the market. Commercial buyers may be well placed for keen quotes, particularly if there are economies of scale. In addition, companies may be able to claim PV installation as a capital expenditure (CAPEX) (advice: talk to a competent accountant). 2) Rising electricity prices. Grid prices rose around
10 per cent in 2011 and, although energy prices can bounce around in the short term, PV is not a short term investment. Most commentators expect electricity costs to rise significantly, even in the medium term, which will shorten the payback time of PV installations. As such, PV can have an ongoing, and growing, impact on OPEX.
Most
commentators expect
electricity costs to rise significantly – which will shorten the payback time of PV installations
FIT for purpose?
The Feed-in Tariff (FIT) scheme was introduced on 1 April 2010 under the Energy Act 2008. Even the most avid social networkers struggled to keep up with the weekly twists and turns following DECC’s October 2011 decision to try and rein in the cost of Feed-in Tariffs (FITs). The big concern for government has been that, ultimately, the cost of FITs is borne by voters through increased energy bills (businesses also pay extra). *DECC has massively reduced FITs (see Table 1) and they are set to be reduced further in July 2012, and again in October, possibly by 35-40 per cent in total. The tariff may then fall by a further 10 per cent every six months, depending on the number of PV panels installed nationally. These cuts may take place even earlier, if UK installation exceeds government forecasts (DECC has a poor track record on microgeneration forecasting – it anticipated that 137 MW of PV capacity would be installed by April 2012 – but the actual figure was over 1 GW capacity). DECC has also consulted on changing inflation-linking (FITs were adjusted in line with the Retail Price Index from 1 April 2012) and on reducing tariff payments from 25 to 20 years. But the future business case for PV will be about more than the Feed-in Tariff.
3) FITs. In view of the rolling cuts, this might be a surprise addition to the list, but the fact is that FITs are still here. Get them while you can! Once a buyer has registered their new PV system, they should receive the agreed tariff (including an ‘export to the grid’ tariff) for at least 20 years, irrespective of
May 2012 ECA Today 31
GDC
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