SUSTAINABILITY PART 2
jobs and delivering the technologies that will power our future. “At a time when closures and cuts dominate the news cycle, next-generation industries are providing jobs and sinking capital into Britain. I want to take aim at the curmudgeons and faultfinders who hold forth on the impossibility of renewables – the climate sceptics and armchair engineers who are selling Britain’s ingenuity short. “We are not going to save our economy
by turning our back on renewable energy. It is this three-party consensus that makes the UK such a good place to invest. So I can today assure you that this government has resolved that we will be the largest market in Europe for offshore wind.”
Sunny ouTlook? It’s not only windpower that’s important. The sun too is a key natural element on which much is riding. Already, the Government-backed, 25-year term Clean Energy Cashback Scheme, better known as FiTs (Feed-in tariff), has driven the installation of more than 100,000 commercial and residential building solar photovoltaic (PV) arrays, to generate electricity, since its launch in April 2010. FiTs incentivises consumers to generate
electricity from renewable sources through the payment of a tariff for all the electricity generated plus an additional tariff for that which is generated and sold back to the National Grid. At domestic level, the tariff is most
generous to those installing up to a 4kW solar PV system. It currently pays 43.3 pence per kWh generated, plus an additional 3.1p per kWh for those units generated and exported. The output of a 4kW PV system will be around 3,200 kWh per annum (which is the average domestic electricity use in a UK home, according to British Gas). The south or south-east/ south-west facing roof space required for a 4kWp solar PV system is around 30m2. The cost of panel purchase and inverter
(required to convert the DC current solar panel produce to AC so that it may be used) varies widely, but a good rule of thumb is £3,500 per kW installed including VAT at five per cent. Therefore, a 4Kw system should cost no more than £14,000. Competition and economies of scale are decreasing prices markedly month by month. The ROI is around nine per cent per annum over 9 years, based on an annual income of around £1,400 from the FiT, plus an electricity bill saving of approximately £200.
The profit potential for solar power has just been cut by 51 per cent.
The big ‘buT’ However, just as the scheme looked set to take off, the Government slashed the tariff by 51 per cent. The 43.3p/kWh tariff has been reduced to 21p/kWh for retrofit systems up to 4kWp. The proposed tariffs apply to all new solar PV installations with an eligibility date on or after 12 December 2011. Such installations would receive the current tariff before moving to the lower tariffs on 1 April 2012. Climate Change and Energy Minister
Greg Barker said, “My priority is to put the solar industry on a firm footing so that it can remain a successful and prosperous part of the green economy, and so that it doesn’t fall victim to boom and bust. The plummeting costs of solar mean we’ve got no option but to act so that we stay within budget and not threaten the whole viability of the FiT scheme”. The tariffs will offer a return of around
4.5 per cent to five per cent index linked and tax free (for domestic installations) for well-situated solar PV – broadly comparable to that intended when the scheme was set up. The tariffs are broadly comparable to those offered in Germany, which has also recently reduced its tariffs. The Solar PV industry is up in arms at
the summary announcement. David Hunt, a director with Eco Environments, said, “We do not dispute that the Feed-in-Tariffs should be reduced but to a sensible level.
Slashing payments by 51 per cent is the economics of the madhouse. “The Government claims that the announcement is intended to provide the solar industry with a clear and sustainable growth path, avoiding boom and bust, but its proposals will cause exactly that. “Companies such as our own, offering a
comprehensive range of renewable energy technologies, will be okay in the long-term, but there are many companies dependent solely on solar power which will now go to the wall along with thousands of jobs. “We will be looking to make the
Government see sense and amend its proposals during the consultation process. Businesses, jobs and consumer confidence are at stake unless Ministers row back from such a drastic reduction in the FiTs.” But not everyone is so aggrieved.
Andrew Holmes, managing director of the Climate Energy Group said, “It’s disappointing that Feed-in-Tariff payments have been reduced, as for many these payments are the incentive that’s needed to invest in renewable technologies. “Despite these changes, homeowners should not ignore the many benefits that solar PV offers, including tax-free income from FiT payments, albeit now reduced, and the generation of free electricity, both of which will help to reduce fuel bills considerably. “And, as some experts estimate that
PROPERTYdrum DECEMBER 2011 35
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