Free solar power system. Is it a scam?

WestonDave

Firstly apologies as I clearly had misunderstood. I think I'm now clear that the economic model is based on offsetting the purchase, instal and maintenance of the panels, against the 36.5p per KWH gained from selling surplus power not used by the home owner.

It doesn't surprise me to learn that a power company is thinking about running this sort of scheme - afterall, if you have to pay someone a premium rate for electricity, you might as well pay yourself. Its an interesting trade off in my mind between dealing with the potential financial stability of a large power company or the perhaps more customer focussed smaller operators.

If I can make one further comment without appearing to be critical - I can see why the Government are happy for this scheme to go ahead as it doesn't really matter to them if the power companies have to pay for it. However I wouldn't be surprised if a power company sought to get a judicial opinion on whether 2000 individual sites under the same operator actually constitutes one large scale generator rather than 2000 smaller ones. If a power company were to offer this scheme to its own customers the distinction would be largely irrelevant, as what it loses by being forced to the lower tariff, it gains by not having to pay so much! However if it can force down the price it pays to a 3rd party like ASG that is going to be a benefit.

As I said this particular scheme isn't going to be relevant to me personally so I'll bow out here, and keep my eyes open for impending free lunches down south!

Cardew

Sarah,

Once we got the 'terminology' issue sorted, there hasn't been a problem as far as I am concerned; and certainly you have been remarkably 'up front' with your answers.

I also don't think you need to be defensive about where you buy your panels - a commercial company is governed by commercial decisions. In any case Sharp are a Japanese company, and whist their panels are 'made in UK' I suspect a better term might be 'assembled in UK' with the photovoltaic cells imported from the Far East.(not certain that is the case - but would wager it is)

My only 'issue' is really one of surprise that your company is allowed to exploit what I consider to be a loophole in the regulations.

I am far from being an expert on this subject, but my understanding is the proposed FIT scale of payments is that generators of less than 4kW will get 36.5p/kWh. - when retro fitted to a property.

The scale reduces progressively down to 26p/kWh for generation of 100kW to 5MW.

Crucially above 5MW you revert to the old RO(Renewable Obligations) rates of 9p/kWh.

Now your scheme of 2000 systems is above 5MW and so if it were to be classified as a single system would only get 9p/kWh.

However as you have apparently got clearance that your scheme will be treated as 2,000 individual systems each producing under 4kW, you will get 36.5p/kWh

To repeat, as stated earlier, if the regulations allow a company to own and install 2,000 systems dotted about Yorkshire and draw FIT income, I cannot understand why they are not allowed to own 2,000 systems all concentrated in a small field, and be treated in the same manner for FIT income.

You are correct that the FITs is funded by a levy on on all electricty sales(i.e. we all pay for the FITs)

This really does raise the issue of what will happen if the really big players like BG etc get in on the act.

BG supply to about 10 million homes? If they were to fit solar systems to, say, 2 million the profits they would make could be huge if they were allowed to claim in a similar manner to yourself, and of course that profit would come from a levy on all electricity customers(not just BG).

IMO it just wouldn't be tolerated by the Government and British public.

A_fiend_for_life

Cardew wrote: »

This really does raise the issue of what will happen if the really big players like BG etc get in on the act.

BG supply to about 10 million homes? If they were to fit solar systems to, say, 2 million the profits they would make could be huge if they were allowed to claim in a similar manner to yourself, and of course that profit would come from a levy on all electricity customers(not just BG).

IMO it just wouldn't be tolerated by the Government and British public.

Very good point.

A requirement for suitable energy efficiency as per the grant system should make it more difficult to flood the market. As well as a cap on the number of installs.

This model also has opportunities for cross selling for those properties that are not up to scratch. Effectively a discount on glazing albeit small.

Alternatively, concentrating on suitable areas where fuel poverty is an issue would be a small win win for government. That way glazing could be done piecemeal and at a more affordable rate.

I suspect housing associations, local authorities and community regeneration schemes will be looking at this model. Presumably these have KPI's for improving houses in fuel poverty.

Dave2112

Interesting thread as usual - have been looking at installing PV myself.

As I understand it with this scheme....
- the company install the PV system and maintains it for free. They get the FIT tarrif on all PV electricity generated (stable) plus any other payment for PV electricity not used by the householder and fed back into the grid (variable based on individual usage).
- if the PV panel is generating electricity then the householder uses this for free. If the PV panel is not generating then the householder pays whatever rate they are signed up to with the generating company

My consumption is low/middle I believe @ 1800 a day which breaks down to approx daytime - 800, evening - 600, night - 400 and assuming all day and half evening come from the PV this would mean 1100 units free which @ 13p per unit = £124 a year (of course this is based on all the electricty being from the lower band (ie above the usage threshold) rather than the expensive units. I'm also on "Economy 7" so pay cheap night time units. If I had to change the tarrif to go PV then that would eat into any profit.

As for the loophole of a company benefiting from the FIT @ 36p then what is the scheme aiming to promote? Is it more small scale energy companies (ie individuals) or is it to set up small scale renewable generating plants which in this case is on people’s roofs?

1) If the big generating companies are paying for the FIT tariff and they start to do this scheme then they in effect pay out the 36p and then get it back again. More small scale renewable plants, the householder gets cheaper bills straight away. FIT basically balances out – if all companies do it, if only one does then the others subsidise that one.

2) With this scheme there are more small scale plants (but not individuals) though the individual gets cheaper bills from the off. FIT goes to private companies / shareholders. But at what point does this company, if at all, start to contribute to the FIT payments as it’s an electricity generator?

3) If a householder pays for installation then again more individual producers and small scale plants and whole thread on whether the individual is better of in 10, 15 or 20 years time. FIT goes to individuals.

In 1) and 2) there seems to be business plans for everyone to save/make money. Only in 3) is there doubt over whether the individual saves/makes money and that's based on time. So it seems to me that someone, somewhere in scheme 3) is making a lot of money the other schemes aren't which means the individual is suffering - which IMO point to the high cost of private installation.

Oh, but is the big question about this scheme "Who cleans the panels" ;-)

Cardew

Dave2112 wrote: »

Interesting thread as usual - have been looking at installing PV myself.

As I understand it with this scheme....
- the company install the PV system and maintains it for free. They get the FIT tarrif on all PV electricity generated (stable) plus any other payment for PV electricity not used by the householder and fed back into the grid (variable based on individual usage).
- if the PV panel is generating electricity then the householder uses this for free. If the PV panel is not generating then the householder pays whatever rate they are signed up to with the generating company

My consumption is low/middle I believe @ 1800 a day which breaks down to approx daytime - 800, evening - 600, night - 400 and assuming all day and half evening come from the PV this would mean 1100 units free which @ 13p per unit = £124 a year (of course this is based on all the electricty being from the lower band (ie above the usage threshold) rather than the expensive units. I'm also on "Economy 7" so pay cheap night time units. If I had to change the tarrif to go PV then that would eat into any profit.

As for the loophole of a company benefiting from the FIT @ 36p then what is the scheme aiming to promote? Is it more small scale energy companies (ie individuals) or is it to set up small scale renewable generating plants which in this case is on people’s roofs?

1) If the big generating companies are paying for the FIT tariff and they start to do this scheme then they in effect pay out the 36p and then get it back again. More small scale renewable plants, the householder gets cheaper bills straight away. FIT basically balances out – if all companies do it, if only one does then the others subsidise that one.

2) With this scheme there are more small scale plants (but not individuals) though the individual gets cheaper bills from the off. FIT goes to private companies / shareholders. But at what point does this company, if at all, start to contribute to the FIT payments as it’s an electricity generator?

3) If a householder pays for installation then again more individual producers and small scale plants and whole thread on whether the individual is better of in 10, 15 or 20 years time. FIT goes to individuals.

In 1) and 2) there seems to be business plans for everyone to save/make money. Only in 3) is there doubt over whether the individual saves/makes money and that's based on time. So it seems to me that someone, somewhere in scheme 3) is making a lot of money the other schemes aren't which means the individual is suffering - which IMO point to the high cost of private installation.

Oh, but is the big question about this scheme "Who cleans the panels" ;-)

Dave,
Just a couple of comments on your post.

"If the big generating companies are paying for the FIT tariff and they start to do this scheme then they in effect pay out the 36p and then get it back again."

It is not the companies that pay out for the FIT but the electricity customers. There is a levy on the cost of electricity(the scheme is administered by ofgem) to pay for the FIT subsidy.

The more solar energy that is generated by systems that qualify for FIT, the more customers will pay for their electricity.

I am not arguing that this wrong - but 'there is no such thing as a free lunch'.

The proposed scheme for 2,000 systems will make a profit(and good luck to them) but let us be very clear that it is us customers that will be paying for that profit they make.

The point I was making above is that if BG were install the hypothetical two million systems, and it was treated in the same fashion - i.e. 2 million individual systems - then BG would be making huge profits paid for by us consumers in higher prices.

P.S.
"Oh, but is the big question about this scheme "Who cleans the panels" ;-)"

Whilst the TIC style was appreciated, I was actually reading a USA blog yesterday which stated how essential it was to keep the panels clean!!!!

Mankysteve

I suspect are higher rain fall should help keep the panels cleaner. plus air got less particle pollution in it. It sound to like a ok idea but i don't think you really have much of a business model I presume you'll be looking at around a 5year payback on each insulation.

Dave2112

Cardew, I understand that the FIT is ultimately paid for by the customer. What I was trying to say in option 1) was if the electricity gererating company has to pay £X amount for the FIT and this is passed on to the consumer, then if they follow this model they could get most of that FIT charge back, say £Y. So instead of passing on £X to the customer they could pass on £X-Y. Of course, they may well pass on £X and pocket £Y as extra profit which is, I think, what you're saying. Option 2) is where the customer pays the FIT and it goes into the profits of a private company with no option to offset electricity cost's increased by FIT. BTW, I don't understand how the scheme will be administered and how the end customer gets the extra charge so 1) is theoretical only.

Cardew

Dave2112 wrote: »

Cardew, I understand that the FIT is ultimately paid for by the customer. What I was trying to say in option 1) was if the electricity gererating company has to pay £X amount for the FIT and this is passed on to the consumer, then if they follow this model they could get most of that FIT charge back, say £Y. So instead of passing on £X to the customer they could pass on £X-Y. Of course, they may well pass on £X and pocket £Y as extra profit which is, I think, what you're saying. Option 2) is where the customer pays the FIT and it goes into the profits of a private company with no option to offset electricity cost's increased by FIT. BTW, I don't understand how the scheme will be administered and how the end customer gets the extra charge so 1) is theoretical only.

Dave,

The revenue to pay for the FITs is raised by a levy on the price of electricity which every electricity company must pay.

So if Company A and Company B sell the same amount of electricity they pay the same amount of money into the 'FIT fund' administered by ofgem.

It is my understanding - taking a silly example - that if Company A have 1 million solar customers and Company B have no solar customers, that Company A pay their customers the FIT money and claim this back from the ofgem administered 'FIT fund'.

If you like the FIT fund is a 'kitty' that all supliers contribute to, and draw from according to their FIT expenditure; so there is not profit or loss for a company paying FITs to their customers.

The hypothetical example I gave of BG installing 2 million solar systems is nothing to do with BG being an energy company, other than they have access to millions of customers.

It would be exactly the same as, say, Barclays Bank, installing x million solar systems using the same business model as 'A shade greener' i.e. claiming they had x million individual systems.

I just cannot see the authorities allowing a firm to 'cash in' in that manner.

furndire

As a follow up to this thread.
Originally I got an email saying the roof didn't fit Shader Greens's criteria. I asked why, as I knew the roof was big enough, and south facing (actually 18 deg sw) and we aren't overlooked. They had another look, and sent a really helpful surveryor out to check (and he was very thorough). I didn't think we would fit their criteria, as the roof was such a steep pitch, but I have just had a phone call from Sarah to say our roof is suitable, and hopefully we will get the panels in March. So hopefully next year free electric.
Apparently when they originally checked they thought our house was a terrace - well it is 50ft long with no windows.
Basically you are renting out your roof for free electric, which can't be bad. Pay back for us installing would be a long while, so this suits nicely.
There will be no charges to us, they maintain them, and its a long contract. So I'll report back when I hear more.

feesh

I work in the renewables industry (not solar) and I can kind of see how this scheme might work. But I do wish the people involved, specifically Sarah who presumably handles this company's PR would get their facts right, as making vague and incorrect statements does not do the solar industry any favours at all and as has been pointed out, it's an industry plagued by cowboys so they need to really set themselves apart from the pack and gain people's trust.

Sarah seems to have no grasp at all of the proposed Feed in Tariff and also seems to be a little confused by ROCs (and these panels won't be eligible for both).

Also the statement that no PV panels are made in the UK is incorrect - there is a factory in Wales and I'm sure many more will crop up when the FIT causes the market to take off next year (hopefully). http://www.pvsystems.com/