MSE News: Legal battle launched over solar subsidy cuts

rogerblack

celerity wrote: »

Plus the other thing people seldom take into account with the FiT is that all the early adopters have effectively injected the economy with around £10,000 each.

Not quite.
You have to subtract the price of the solar panels, and related kit, which are almost inevitably built overseas, and imported.

celerity

rogerblack wrote: »

Not quite.
You have to subtract the price of the solar panels, and related kit, which are almost inevitably built overseas, and imported.

At the very least import duty would be paid, and likely to pass through a UK distributor too.

/\dam

Martyn1981

celerity wrote: »

As far as I know, the £8.50 per year figure is factored over 30 years.
You presumably have to add inflation to it, but nothing else.

/\dam

Sorry Celerity, I typed without explaining there.

I was thinking if another 200k houses (each 2 yrs) at 21p, then 10p, then 5p = 35p on top of the current 43p.

I scaled it down slightly to 50% on the assumption that tighter FITs controls and the EPC C rating requirement / conditions should keep numbers at less than we've seen. Also, that many of those with the money, inclination, suitability etc will have already acted.

Regarding solar farms, I think Zeupater has addressed the distribution losses side several times since Nov. But I thought I'd have a punt at the economics.

All complete guesses of the top of my head, so feel free to play around as necessary.

10,000 panel farm (costs broken down, into 16 panel portion for comparison to £8k domestic system).

16 panels (half the 'going rate' for economies of scale = £2,000
Inverter, I simply divided £1,200 by 4 as a guess = £300
Long lasting ground mounts 8m by 3.5m plus install = £300
Grid connection fees £100k / 10,000 panels * 16 panels = £160
Cabling, fittings etc = £20

Mostly guesses = £2,780
Plus labour, profits, planning, site preparation etc £1,000 = £3,780

Annual costs not associated with domestic / commercial install
Land £10,000 pa
insurance and security 3*8hr shifts minimum wage = £36,000pa
Admin, management, site maintenace etc 1/2 time work medium wage = £10,000pa
Total = £56,000
Applied to initial cost = £56k * 40 years * 16 / 10,000 panels = £3,584

Grand total = £2,780 + £3,584 = £6,364

Note: I think my land and labour costs are a little low, but when I first ran them the total came out suspiciously / surprisingly close to £8k, so I thought I'd better lower them. Technically, I've rigged the numbers so they wouldn't look rigged!

Both systems will require maintenance such as inverters, so I've excluded. Panels and panel degradation will be the same (shared technology) so I've excluded any performance difference.

The farm will have perfect orientation and optimised panel angle, and better cooling, so I assume 10% better generation than a good home install. 10% should be similar to system losses compared to consumption at source / next door.

Finally, remembering that the infrastructure investment is from private funds, the farm has to compete with wholesale electricity prices and pay taxes to be profitable.

A domestic (or commercial install) needs to meet a combination of wholesale and retail price (depending on consumption %), giving it a large financial advantage on reaching subsidy free viability. A factor of perhaps 2 or 3.

Mart.

Pennylane

Martyn1981 wrote: »

Hiya. I thought I'd get a view on the subsidy from the horses mouth. So I asked my father who is a retired widower on a low fixed income.

He watches every penny (too hard sometimes) but has mellowed a bit as he's got older. I suggested FITs could add about £6 to his electricity bill and he described that as 'a gallon of derv'. So I said the green tariff has added about 10% to domestic electric bills (about £25 for him). he pointed out that as a pensioner he got free cavity wall insulation and would have got free loft insulation but I did it for him, saving him about £100 a year off his gas bill.

He also reckons he saves about £30 a year from the low energy bulbs he keeps getting free. 'swings and roundabouts' was his conclusion.

He also mentioned that he gets the winter fuel allowance too, which he thinks should be paid directly to the gas company, as he could 'blow it all on fags and beer' if he wanted too. (He doesn't).

At 74, he said for me to post, 'I've had my fun, it's my kids and grandkids I worry about now!'

As you say, if this works, then we could have energy savings (negative demand) that are substantial, for what is, in government spending terms, a relatively small subsidy. If it doesn't work, then infrastructure spending and subsidies mean we've widdled about £2bn up against the wall. Another 2 years of good PV price movements and we should have a good idea on the potential success.

I think if subsidies are better managed now, and installs slow a little, then over the next 5/6 years, that £6 or £8 should only go up about 50% more at most. Cutting out 2 gallons of diesel or 2 packs of cigs, would also help with CO2 emissions!

Mart.

I can see where you get your commonsense, politeness and interest from ........ sounds a great Dad!:)

I'm not saying I'm in your league in any of those depts but my elderly Mum is pretty much the same. She goes to a Luncheon Club and is always coming home with tales of her old buddies complaining about the price of heating etc. She has to remind them that they get the heating allowance and then they all have a good laugh!:rotfl: She says she has nothing to complain about and she only gets her pension. She reckons she's more comfortably off than she was all her life. She's got the CW Ins, Loft Ins and she already had d/glazing. Alongside her Heating allowance a local charity gives a further £50 (or it could be £100 can't remember) to all pensioners every winter.

Martyn1981

Thanks Penny, that's very kind of you.

It's really a tricky situation, and I have to agree with Cardew that our electricity bills are not necessarily the right place to locate this tax.

This enormous 'experiment' is part of the UK's commitment to meet EU and world CO2 rules and targets, and whilst these relate to energy usage, at such an early and front loaded stage I think they could have been better absorbed into general taxation.

I'm not targeting any particular party, as they all play the same games now, but the tactic of reducing general income tax (about 33% when I left school) down to 20%, whilst putting it all back on in other ways, is simply divisive. I think NI was 5% and VAT 15%, back then, so no real gain in anything other than confusion.

I've got my fingers crossed that not only will the 21p rate get sorted quickly, but also that govt will review that asap, if only to show that it is now being better managed, and restore 'some' confidence, Sadly I think the boat has sailed on anything greater than 'some'.

Mart.

rogerblack

celerity wrote: »

At the very least import duty would be paid, and likely to pass through a UK distributor too.

/\dam

True - by price, I was referring to the foreign currency price - which the UK economy has to work harder to pay back.
Sorry for being unclear.
Also, import duty is not payable on solar.

jimjames

zeupater wrote: »

Hi

I agree, however, the issue is that a very substantial proportion of those with strong opinions, data and statistics actually do have an agenda and often do attempt to promote their own businesses, either directly or not. Many times the data & statistics are very questionable, possibly misinformed, or, more likely, deliberate misinformation ... is this not lying in a different guise ?
Z

Not directly related to solar but the thing that always amazes me is the ease by which statistics are quoted especially in the news with absolutely no consideration of the context or whether the information being given has any factual relevance.

This article is a perfect example
http://www.moneysavingexpert.com/news/banking/2012/01/millions-use-payday-loans-to-pay-the-mortgage

The headline mentions payday loans but the details also refer to mortgages. The number quoted is 2% of people have used loans to pay the mortgage, yet the headline would be far less dramatic if it said 98% of people have no problem paying their mortgage or rent.

Whenever you see statistics used you need to look beneath the headline to see what the real story is.

jamesingram

this is what i was referring to in another thread https://forums.moneysavingexpert.com/discussion/3698069, regarding some of the reasoning behind the recent confusion on the future funding of the FITs budget.
"According to the Office for National Statistics (ONS) a decision is yet to be made on whether feed-in tariffs are deemed to be imputed ‘tax and spend’ and therefore included within the public finances for National Accounts purposes."
"In lieu of a decision from ONS, DECC took a view that levy funded schemes (such as the FiT) should be deemed as imputed ‘tax and spend’ and as a result included in the comprehensive Spending Review, which imposed the budget the scheme operates under today.
DECC justified the pre-emptive decision by stating: “Ministers took the view that they needed to make a judgment about where they thought that classification was likely to come out ... based on information from decisions that the ONS has already made and its description of the factors that it takes into account in determining whether something counts as tax and spending.”"
http://www.solarpowerportal.co.uk/news/ons_to_discuss_classification_of_fit_budget_in_april/?utm_source=Feeds&utm_campaign=News+Feed&utm_medium=rss

Any thoughts on this ? Is this the real reason for the recent rate cut, rather than the claimed ,stopping over generous returns for all involved in PV ( which clearly has been the case) and protecting the consumer against and unreasonable levy?
It seems if the ONC deem it's not 'tax and spend' then its level no longer needs to be controlled due to the com.spend.rev.

I personally believe it was wise to reduce it ( should have been done earlier) and it's level should be continually reviewed.

grahamc2003

Cameron was on the news last week talking about fits - he said they needed to be cut quickly to stop becoming overburdensome on consumers (or something like that) - seems the most likely reason for the very quick cut.

But today, the fit budget was increased another couple of hundred million - not sure where the extra is coming from. The speculation is that the decc expects to lose their appeal tomorrow. If so, the green feeding frenzy will continue for a while longer. And the directors of companies which have taken the oppotunity of going bust, taking hundreds of £500 deposits with them from confused customers, will likely be in for another bonanza with their new companies, at least for a few weeks, courtesy of you and me, one way or the other.

What a pleasant 'green' economy we are developing.

The_Green_Hornet

grahamc2003 wrote: »

Cameron was on the news last week talking about fits - he said they needed to be cut quickly to stop becoming overburdensome on consumers (or something like that) - seems the most likely reason for the very quick cut.

But today, the fit budget was increased another couple of hundred million - not sure where the extra is coming from.

The funds were re-allocated from the Renewable Obligation (RO) incentive scheme.

http://www.businessgreen.com/bg/news/2136254/decc-quietly-delivers-gbp197m-boost-feed-tariff-budget