Does anyone here have an ideological objection to Solar?

zeupater

Cardew wrote: »

No I didn't overlook your post, I just didn't and don't think it relevant to the issue.

Addressing, the General Tax versus a Levy. You know full well, as did Energentic, that the subsidy doesn't come from general tax - i.e. Income Tax, VAT etc etc.

If you have a £500 electricty bill and earn £1million a year, you pay the same amount toward the FIT subsidy, as a pensioner on subsitence income, with a £500 electricity bill.

No amount of semantic juggling will change that situation.

On the second point, are you prepared to agree with Martyn that:



It really is a simple question.

Hi

Not the tax obfuscation approach again .... If you look back you'll see that it was actually described as being 'Government Spending' .... well it's on the books, the government say it's tax & expenditure, the EU say so also so I'd rather believe them and the official definition than a position held by very few which describes it as not being taxation because the method of collection is different and the funds are ringfenced ... local authorities collect tax in one way, cars are taxed in another, beer taxation is administered by the breweries, passenger duty by the aviation sector, VAT by whole array of sectors ... there are a number of forms of taxation where income is offset by expenditure (VAT for one), it's just that FiT, being ringfenced, is designed to fully offset expenditure against income in order to minimise unnecessary administration ....

As for ... "If you have a £500 electricty bill and earn £1million a year, you pay the same amount toward the FIT subsidy, as a pensioner on subsitence income, with a £500 electricity bill." .... isn't it likely that someone earning £1m would have a higher heating bill and therefore pay more tax ? .... would it not be similar to a pensioner with a 10 year old car because it's a necessity and a more efficient newer replacement is unaffordable, paying £270/year in roadfund taxation and achieving 20mpg whilst the millionaire actor has a new Prius or Tesla on a regular basis to maintain 'tree hugging credentials' pays no roadfund and gets three time the distance on the same fuel ? .... why are these pensioners not considered as being even more disadvantaged ?? ..... clutching onto just one aspect of FiTs in order to portray a negative picture whilst disregarding the full picture is purely misplaced ideology ....

Regarding the 'simple question' ... you obviously read the post because you referenced it, so again, read it and see the answer to the question you asked before you asked it ....

zeupater wrote: »

.... is pretty easy to understand and has been made and explained that many times that even a 1 month old goldfish will understand and remember it by now ..... leaving FiTs aside, because they complicate the issue, in a location where there is potentially grid-parity for solar pv, a proportion of the returns for a domestic scale system will be based on domestic energy pricing (with additional potential for sale of exported units at wholesale rates), whilst farm-scale installation returns will be on a wholesale only basis .... If the proportion of self-use is significant then the return per Wp installed will be significantly greater for domestic scale systems, in the UK this would likely be a on a ratio of approx 3:1 if self consumption was high .... this simply leaves the relative capital investment between the systems - if the capital cost/Wp ratio between domestic and farm-scale systems is less than the apparent ratio of domestic to wholesale energy pricing then the domestic system simply is "more economically viable than solar farms" and I would agree, as would any engineer, accountant or economist worth their salt ....

This is extremely clear, it's extremely easy to understand, it's what both accountants and engineers should both have learned as part of their basic education .... it's the basis of how you would justify expenditure on a project, any project ... it's the basis of how you select one solution over another .... it's the basis of writing a Capex (I've successfully written hundreds, if not thousands of these ) ....

HTH
Z

Leeds_Solar

Cardew wrote: »

Have you noticed that not one of your supporters and sympathisers have actually come on MSE and agreed with you on that statement.

fwiw, I reckon the most economically viable solar installations are around the 30-50kWp mark on commercial premises with extremely high day time on site consumption rates where they can also recoup much of the initial investment costs as capital allowances.

In those situations it's an absolute no brainer if they have the capital spare as it can have a payback as low as 4-5 years, and returns above 20% per annum IRR for the best situations / cheapest installs.

If you've got a house with seriously high day time energy consumption levels, and a 4kWp system then payback could well be 15% per annum plus even using the IRR method to base the returns purely on the overall cash profit, obviously depending on the install price and performance.

More generally though, domestic solar returns now tend to be more like 8-12% using the IRR method for decent locations with average on site consumption - at least they do at the prices we're charging, not so at the rip off prices we sometimes come across from the big scam marketing firms eg £12k for a 4kWp system we came across as a quote from one of them recently, which is about double our prices.

I don't work on the big farm scale stuff, but would expect that the best domestic systems could give better returns than it, but more averagely it's probably around the same returns as they don't benefit from any on site consumption savings, and that's a serious component of the payback these days.

hope this helps put the differences into some perspective - figures are all ball parks and will vary significantly depending on specific circumstances.

Leeds_Solar

Before anyone started complaining about those levels of returns for businesses, I thought I ought to point out that most SME's in the UK at this point 4-5 years into what's pretty much a depression, don't actually have that sort of level of capital floating around to invest in something that's none core to their business.

They therefore will mostly need to borrow to fund the solar PV, and IME most are struggling to get better than 7-8% fixed interest rates over the periods needed, which seriously changes the payback situation. It is usually still worthwhile for businesses to borrow to pay for it, but it'd be harder to justify if the rates were cut much more - unless/until electricity prices rise further.


I also just noticed that you've gone on to discuss which will become economically viable without subsidy quickest... I sort of agree with both yours and martins points, as in economies of scale are important, but I'm not convinced it's going to happen at anything like the wholesale rates alone. I can see it potentially becoming viable first for 50-250kWp roof mounted industrial type sites where near 100% of generation will get used on site, replacing imported electricity at around 9-10p/kWh at todays rates vs 4.5p export rate. I don't see that there is a 50% reduction in costs as you scale up from that size to 5MW, particularly when you factor in grid connection costs.

It could well also be the case that a few niche high energy consuming domestic systems could hit parity first, eg those on economy 7 where the daytime rate is probably nearer 17p per kWh. If any of the battery back up systems come in at a more reasonable cost then this could help improve domestic payback for all by spreading the savings into the evenings, but that technology isn't really there price or quality wise just yet.

so in reality, it's probably not possible to say for sure which technology will hit parity first, though I'd put my bets situations with high onsite energy consumption hitting it before ground mounted export only solar farms, unless export rates are seriously increased.

Martyn1981

Cardew wrote: »

Your questions are illogical, in fact absolutely stupid! -They have no relevance to the issue - namely that farm PV can be produced at a lower subsidy(FIT) than domestic. Or at least the organisations that prepared business plans(done the figures!) were/are prepared to go ahead with a lower FIT than domestic FIT.

Why are the questions stupid? I'm simply asking you to set out your position. You appear to be saying I'm wrong, yet aren't willing to simply state what you believe.

You keep referring back to Summer 2011, when farms 'where to be built' at a lower FIT, but keep forgetting that domestic FIT was very FAT and could have been lowered even further than the farm FIT .... so ..

Cardew wrote: »

With solar farms getting a lower subsidy, there will be Y% more solar electricity generated for the £1million - 'more bangs for your bucks' as our American cousins say.

With domestic pv getting a lower subsidy, there will be Y% more solar electricity generated for the £1million - 'more bangs for your bucks' as our American cousins say.

Now, back to the questions, since I've always assumed that you don't like subsidies,

Q1. Do you think that farm PV (at wholesale rates) is more viable than domestic PV (at retail rates) in the UK?

Q2. Do you think that farm PV can ever become viable at current wholesale rates in the UK, without subsidies?

Mart.

Martyn1981

zeupater wrote: »

Hi


Martyns point is pretty easy to understand and has been made and explained that many times that even a 1 month old goldfish will understand and remember it by now ..... leaving FiTs aside, because they complicate the issue, in a location where there is potentially grid-parity for solar pv, a proportion of the returns for a domestic scale system will be based on domestic energy pricing (with additional potential for sale of exported units at wholesale rates), whilst farm-scale installation returns will be on a wholesale only basis .... If the proportion of self-use is significant then the return per Wp installed will be significantly greater for domestic scale systems, in the UK this would likely be a on a ratio of approx 3:1 if self consumption was high .... this simply leaves the relative capital investment between the systems - if the capital cost/Wp ratio between domestic and farm-scale systems is less than the apparent ratio of domestic to wholesale energy pricing then the domestic system simply is "more economically viable than solar farms" and I would agree, as would any engineer, accountant or economist worth their salt.

HTH
Z

Hiya Zeup, there is another very important point, which I'd left out till now, since (someone?) was struggling with the basics that you've just summarised.

The profit point!

No matter how big the PV farm gets, it's costs can't and won't keep reducing, since there aren't economies of scale/efficiency on panels (a farm doesn't buy a gigantic efficient panel), it simply gets bulk discounts on the same panels. Those discounts will diminish quickly. I doubt after 1MW of panels, any further discount would be more than one or two percent.

So farm costs will stop reducing, and with UK solar levels, I don't believe costs (per kWh) can get under current wholesale rates.

Apologies for spelling this out to you (clearly it's not aimed at you), but if for instance the farm costs can get down to 4.5p, whilst domestic are 6p, then the farm has nil profits against 4.5p, whilst the house has profits against 7.125p (65% of 4.5p + 35% of 12p). In fact, when comparing the two, the house would be infinitely more economically viable?

Edit: [at 100% consumption (extremely unlikely) domestic PV is already viable:

4kWp southern based, south facing 1,000kWh/kWp - £6,000

per kWp,
annual cost £60 (£1,500/25)
cost of capital £45 (£1,500@3%)
cost per kWh 10.5p, income (savings) 12p

with the addition of maintenance costs, this is highly marginal, but heading in the right direction, and 12p is a pretty low rate.

For new build, costs would be significantly lower (20%+?) ]

Now I (and I assume all others) are fed up with this 'farm distraction'. We have what we have, and it's working very well. I hope we see more farms built, and I sincerely hope they can remain viable despite falling subsidies. FITs has dropped massively and is pretty FAT again, so further reductions will roll out once installs go back up.

Hopefully the UK wholesale rate will rise as it currently hides nuclear and carbon subsidies (this discriminates against renewables, and efficiency savings). When (if) it does, then farms will become more viable, as will commercial and domestic installs as wholesale price rises push up both the export income and the import savings.

Mart.

zeupater

Leeds_Solar wrote: »

fwiw, I reckon the most economically viable solar installations are around the 30-50kWp mark on commercial premises with extremely high day time on site consumption rates where they can also recoup much of the initial investment costs as capital allowances ....

Hi Leeds Solar

Welcome to the forum ..

Thanks for the insight from within the industry, most interesting.

As you seem to have gathered, the debate here is constantly 'bogged down' by idealogical opposition to pv subsidy, capital support & incentive, completely ignoring the issue of support to other generating sources and the scale of the FiT scheme relative to other PFI schemes.

It has been explained, on numerous occasions, that FiT support for pv is a temporary measure to 'kick-start' the industry, both within the UK and globally, to enable economies of scale and a maturing consumerised marketplace to develop thus forcing fully installed system prices to become viable without further support .... however, we seem to continually be returned to a point in time where FiTs reflected a 2009 economics level (as launched) and installations were priced at third quarter 2011 levels, or later.

The second point of contention has been the targetting of the subsidy and differentials between domestic and commercial-scale installation which effects the relative return for the taxpayer(/pensioner!) in terms of generation per unit subsidy. This position is continually raised and revolves around a basic accounting error which any accountant would highlight in a nanosecond if applying double-entry logic (ie disregarding self consumption from network benefit) ....

To overcome the continual return to a convenient point in history and to remove the contentious issue of subsidy completely, the discussion moved on to a future position where there are no FiTs, a point where support is no longer required .... reference has been made to an unsupported (although there are likely capital allowances as per any other industry) farm-scale installation in Spain ... 150MWp costing €150million ... commercial viability seemingly exists in higher insolation countries with substantially cheaper land ..... however, the retort to any logical progressive move seems to now be obfuscation and selective reference, usually conveniently out of context ....

My position, like yours, is that in a situation without any form of subsidy, it would almost certainly be a high self-usage domestic or small-scale rooftop commercial installation which would reach economic viability before farm-scale generation because of the value of displaced energy imports. When you dig a little deeper and factor in taxation capital allowances the small-scale rooftop scenario wins ....

Looking forward to post-FiT times, I wouldn't be too surprised if there is a replacement microgeneration scheme for individuals which, to an extent, mirrors capital tax allowances for business, therefore readdressing the differential between business and consumer generation and supporting microgeneration ... effectively restoring a level 'playing field' .... this could easily be administered by HMRC through personal taxation, a little like company car benefits - but in reverse .....

HTH
Z

zeupater

Martyn1981 wrote: »

Hiya Zeup, there is another very important point, which I'd left out till now, since (someone?) was struggling with the basics that you've just summarised.

The profit point!

No matter how big the PV farm gets, it's costs can't and won't keep reducing ....

Hi

In other words, the law of deminishing returns .... simplified, efficiencies only effect labour and overhead recovery and therefore the material element becomes a larger proportion of the whole, which, taken to the logical extreme, would dictate that when materials (at the best possible purchase price)=100% of the cost there can be no further efficiency improvement .... of course, deminishing returns also equate to deminishing margins.

HTH
Z

Martyn1981

zeupater wrote: »

Hi

In other words, the law of deminishing returns .... simplified, efficiencies only effect labour and overhead recovery and therefore the material element becomes a larger proportion of the whole, which, taken to the logical extreme, would dictate that when materials (at the best possible purchase price)=100% of the cost there can be no further efficiency improvement .... of course, deminishing returns also equate to deminishing margins.

HTH
Z

Yep, that's the one.

My repeated issue with the basic economics that G & C keep trying to use, is that it simply doesn't work in this context.

i. Macro generation 'should' always trump micro generation unless consideration is given to the differing income streams of supply side v's demand side generation.

ii. PV is not subject to 'normal' economies of scale nor efficiency. It has particular / peculiar differences, that I'm not sure apply to any other generation means (?) - since the same basic powerplant (panel and sun) is used at any given scale.

iii. Land costs - some may consider it a cheat, but the simple fact is that commercial and domestic roofs, have no real alternative value (opportunity cost), so there land costs can be valued at zero.

those differences must be taken into account.

I believe that credit should also be given to micro demand side generation for drawing in additional investment from outside of the generation industry. But I've no idea how others feel about this benefit.

Mart.