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nigelpm

Martyn1981 wrote: »

The FiT rates

Good news for renewables as subsidies continue to fall fast.

Mart.

Definitely.

It's clear to me that the tariffs are too generous - there is no way one should be able to return over 10% from it when interest rates are 0.5%.

Essentially what is happening here is the wealthy or those with enough roof space are being subsidised by those who haven't got that ability. Certainly for me the tariff could be cut by 35% overnight and it would still be worthwhile.

Sterlingtimes

nigelpm wrote: »

It's clear to me that the tariffs are too generous - there is no way one should be able to return over 10% from it when interest rates are 0.5%.

A better comparator would be a fixed term RPI linked annuity, but potentially taxable. This would be higher than 0.5%

Then the solar option is not risk free. There is the risk of moving house and not recovering the investment. And maintenance and replacement costs.

nigelpm wrote: »

Essentially what is happening here is the wealthy or those with enough roof space are being subsidised by those who haven't got that ability. Certainly for me the tariff could be cut by 35% overnight and it would still be worthwhile.

For the national good to reduce reliance upon imported fuel some owner-occupiers with roofs facing south without shade and not expecting to move for a number of years are deciding on economic grounds to invest in solar. The better the tariff the more will consider the investment.

It is idea for people like me, getting closer to retirement who would direct pension capital into solar.

I do not buy the "wealthy" argument. Most panels I see are mounted on very average houses.

lstar337

Sterlingtimes wrote: »

I do not buy the "wealthy" argument. Most panels I see are mounted on very average houses.

It may just be me, but I class anybody who can afford their own house and have the spare money to spend on a PV system as 'wealthy'.

zeupater

... It all pales into insignificance when directly compared to pfi contracts ... there's a school not too far from here which cost nothing up front, but the (<£40million) building which replaced a couple of perfectly good 1960/70's existing schools will end up consuming just under £500million of public funds over the contract lifetime .... that's just one project amongst many which was only built as a vanity exercise on the whim of the LA because the money was considered to be 'free' and what should be capital expenditure could be kept 'off-book'. I know that pfi was tested under John Major's government, but Tony Blair et al effectively allowed all levels of government to operate a carte-blanche system as long as the expenditure was kept away from the capital expenditure account ....

What's all this to do with solar and the level of FiTs ? ... well that's simple, reduce the FiT return on capital and you open the door to someone demanding that the return on pfi schemes are also reviewed ... that might just cause a few problems in HM Treasury.

HTH
Z

nigelpm

Sterlingtimes wrote: »

A better comparator would be a fixed term RPI linked annuity, but potentially taxable. This would be higher than 0.5%
.

Sure. I wasn't arguing that 0.5% was a good comparator just that to be 20x the base rate is a phenomenal return.

Best ISA's out there are 3% tax free. 10% is still hugely beyond that.

Sterlingtimes wrote: »

I do not buy the "wealthy" argument. Most panels I see are mounted on very average houses.

Probably rented then. In my local area council and rented houses are awash with solar panels. Also, the houses way above the national average house prices tend to have panels on.

I don't have any figures to hand but it's not really an argument. It's clear to me that to have £5k - £6k to hand or a roof space large enough to take 16 250w panels isn't within the average person's means.

Don't get me wrong I'm a huge supporter of alternative energy I just think the tariff (more so with the RHI) suits the better off and even if it was 35% lower the take up would be sufficient.

nigelpm

zeupater wrote: »

What's all this to do with solar and the level of FiTs ? ... well that's simple, reduce the FiT return on capital and you open the door to someone demanding that the return on pfi schemes are also reviewed ... that might just cause a few problems in HM Treasury.

HTH
Z

Absolutely. Couldn't agree more. PFI's are a farce.

smitchy73

nigelpm wrote: »

Sure. I wasn't arguing that 0.5% was a good comparator just that to be 20x the base rate is a phenomenal return.

Best ISA's out there are 3% tax free. 10% is still hugely beyond that.



Probably rented then. In my local area council and rented houses are awash with solar panels. Also, the houses way above the national average house prices tend to have panels on.

I don't have any figures to hand but it's not really an argument. It's clear to me that to have £5k - £6k to hand or a roof space large enough to take 16 250w panels isn't within the average person's means.

Don't get me wrong I'm a huge supporter of alternative energy I just think the tariff (more so with the RHI) suits the better off and even if it was 35% lower the take up would be sufficient.

The company I'm getting to do my panel install in the next few weeks does a lot of installs on local housing association house. What they told me is an investor pays to put the panels on the roof's of the houses, the investor gets the FIT's payments over the term, and the social housing occupants get the chance to use as much of the 'free' energy.
I'm not saying it's right, but for many social housing occupants this could save them hundreds over a year.

Martyn1981

nigelpm wrote: »

Sure. I wasn't arguing that 0.5% was a good comparator just that to be 20x the base rate is a phenomenal return.

Best ISA's out there are 3% tax free. 10% is still hugely beyond that.

Remember that you can't make a direct comparison as the capital (with a PV system) is gone. If you depreciate the capital cost over 20yrs (seems fair?), then that's 5% per annum.

Doubt I could find it now, but I think the government originally wanted returns in the 6 to 8% range, but after inverter and maintenance costs. So I'd guess that's somewhere in the 8 to 10% range (gross).

I also think that a FiT of about 10p, today, would be financially fine, but I'm a PV'er and no longer have any concerns nor worries about PV. For potential PV'ers, worried about this new and magic technology, they may need more persuading. But it's all going in the right direction.

The good news is that the FiT has already fallen far further and faster than expected, and 5 yrs in is probably 10 years ahead of schedule. If the scheme remains unchanged for 10 more years (probably unlikely) with the current degression system, then I'd suggest that we could see domestic PV FiT rates (plus export) at the same level as the incoming nuclear subsidy for multiple 1.6GW reactors.

Mart.

nigelpm

smitchy73 wrote: »

The company I'm getting to do my panel install in the next few weeks does a lot of installs on local housing association house. What they told me is an investor pays to put the panels on the roof's of the houses, the investor gets the FIT's payments over the term, and the social housing occupants get the chance to use as much of the 'free' energy.
I'm not saying it's right, but for many social housing occupants this could save them hundreds over a year.

It's all totally unfair on those struggling on low incomes who do own their own house as they pay for it through higher energy bills.

Essentially, the poor and anyone without panels are subsidising these superior investor returns.

Interestingly, the only party that gets this and mentioned it in their GE manifesto was UKIP.

nigelpm

Martyn1981 wrote: »

Doubt I could find it now, but I think the government originally wanted returns in the 6 to 8% range, but after inverter and maintenance costs. So I'd guess that's somewhere in the 8 to 10% range (gross).
Mart.

This was the problem. It should have been linked to interest rates IMHO. Absolutely right you should have a slight reward for investing in the panels but 8-10% when interest rates are 0.5% - crazy.