The FIT system is being scrapped!

sevenhills

The UK government has announced plans to axe the Feed-in Tariff (FiT) scheme from April 2019.
The Department for Business, Energy and Industrial Strategy (BEIS) has launched a consultation to scrap the Feed-in Tariff with no plans to replace the scheme.
By scrapping the scheme, impact assessment analysis has shown that savings of between £1.3bn & £1.9bn could be made. These proposals to discontinue FiT are now undergoing a consultation which will take place until the 13th September 2018


https://www.apolloenergy.co.uk/news/feed-in-tariff-to-be-scrapped


No mention is made of existing FITs, I assume they will be unaffected?
The current FIT rate is 3.93 p/kwh; do the generating comanies make their own electricity much cheaper than this? How much will this affect the Governments targets for renewable energy?


The UK’s ambitious target of slashing carbon emissions by more than half within 13 years is at risk because of government dithering on energy policy, industry professionals have warned.


https://www.theguardian.com/environment/2017/jun/26/uk-on-track-to-miss-carbon-emissions-target-due-to-stalled-energy-policy

sevenhills

A quick Google shows that Ebico charge 16.7289p per kWh for their electricity, so a FIT rate of 3.93 p/kwh is very low.

Ectophile

For anyone who wants an actual link to the consultation, rather than just articles talking about it, it's here: https://www.gov.uk/government/consultations/feed-in-tariffs-scheme

KevinG

sevenhills wrote: »

No mention is made of existing FITs, I assume they will be unaffected?

Short of a major re-neg by the Government, all existing FITs are guaranteed at the rate originally applicable, for 25 or 20 years depending on when they started.

KevinG

sevenhills wrote: »

A quick Google shows that Ebico charge 16.7289p per kWh for their electricity, so a FIT rate of 3.93 p/kwh is very low.

The question was about how much it costs to generate electricity, not what one company charges the consumer.

sevenhills

KevinG wrote: »

The question was about how much it costs to generate electricity, not what one company charges the consumer.

I am just speculating on whether energy companies will want the electricity from peoples solar panels. Does anyone know the wholesale price?

Martyn1981

sevenhills wrote: »

I am just speculating on whether energy companies will want the electricity from peoples solar panels. Does anyone know the wholesale price?

It tends to average around 4p/kWh at the moment, but the carbon tax is quite low, and the NAO expect it to rise to about 5.5p in the mid 2020's (in todays money) then slide back towards 4-4.5p in the 2030's.

Leccy supplied at the household end also avoids the losses across the HV and LV grids which is about 8%, and also saves the DNO's monies as they can save on reinforcement costs if the peak loads on the LV network can be reduced by demand side generation and storage.

Coastalwatch

Martyn1981 wrote: »

It tends to average around 4p/kWh at the moment, but the carbon tax is quite low, and the NAO expect it to rise to about 5.5p in the mid 2020's (in todays money) then slide back towards 4-4.5p in the 2030's.

Leccy supplied at the household end also avoids the losses across the HV and LV grids which is about 8%, and also saves the DNO's monies as they can save on reinforcement costs if the peak loads on the LV network can be reduced by demand side generation and storage.

So if FIT and Export tarrifs are being removed next year then the excess solar energy generated and going into the grid will not be paid for!

Can somebody please explain why receiving circa 4p/kWh for each unit produced can be viewed as being a subsidy, as it seems to be at present?

JKenH

Coastalwatch wrote: »

Can somebody please explain why receiving circa 4p/kWh for each unit produced can be viewed as being a subsidy, as it seems to be at present?

Presumably because we get paid the 4p FiT even if we consume the generation ourselves. The export tariff we receive is much easier to justify.

According to the Moixa stats 102 kWh of the 134 kWh I generated last week was consumed in the house or went into the battery so I exported about 24% of output but will be paid for 50%. In my case therefore it is hard to justify even the export tariff.

Martyn1981

Coastalwatch wrote: »

So if FIT and Export tarrifs are being removed next year then the excess solar energy generated and going into the grid will not be paid for!

Yep, which sounds kinda crazy, and I'd say is kinda crazy, almost deliberate to kill off demand side PV.

Coastalwatch wrote: »

Can somebody please explain why receiving circa 4p/kWh for each unit produced can be viewed as being a subsidy, as it seems to be at present?

As Ken points out, the 4p FiT is a subsidy as it's for producing low carbon leccy to reduce national generation from FF's.

And just to be clear, export and offset both reduce FF generation, so all demand side RE generation benefits the grid and the nation's CO2 targets.

So, it's OK and reasonable to reduce subsidies, but what the government is doing is just plain weird.

Based on a wholesale price of 4-5p/kWh then the 4p FiT today compares well with the new nuclear subsidy of approx 5-6p/kWh starting in 2028(ish) (CfD strike price is now 10p/kWh (£100/MWh), so the subsidy is 10p - wholesale rate).

The latest off-shore wind CfD is a fabulous £64/MWh so a subsidy of about 2p/kWh, but not till 2023(ish).

Large scale PV and on-shore wind are cheaper, but these get no subsidy and are therefore being built under PPA's (power purchase agreements) where they sell directly to a large customer at a higher than wholesale price (good for the generator), but lower than retail (good for the customer).

Also, subsidies to the demand side make a lot of sense since they encourage spending that is additional to national supply side investment - homes and businesses raiding their savings for £1k's of leccy generation investment.

There's also the benefit of less system losses, so 1kWh generated at home is equal to about 1.08kWh generated at a large centralised powerplant. And demand side generation helps the local grid (DNO's), and can actually lower peak demand (and peak CO2 leccy) if storage is combined.

If PV is deployed on social housing (as it has, significantly), then it's also a way to directly lower the cost of living.

So, at this point, removing the FiT seems odd, it's not at an unreasonable rate, it's working, and popular, and because the capacity factor of PV is so low, it actually means the volume of payments to PV is quite small.

With the MIP soon to go (fingers crossed), retaining the FiT and promoting some large scale PV through a CfD, could see the UK PV supply system bounce back and lead to potentially very large reductions in the cost of installing PV. Sadly, the government keeps taking a baseball bat to the legs of PV each time it gets too close to the finishing line.

Coastalwatch

JKenH wrote: »

Presumably because we get paid the 4p FiT even if we consume the generation ourselves. The export tariff we receive is much easier to justify.

According to the Moixa stats 102 kWh of the 134 kWh I generated last week was consumed in the house or went into the battery so I exported about 24% of output but will be paid for 50%. In my case therefore it is hard to justify even the export tariff.

Thanks for that Ken and congratulations on utilising 76% of your generated electricity. I can appreciate your take on matters. Conversely we used barely 25% of ours perhaps redressing the balance a little.:)

So, it's OK and reasonable to reduce subsidies, but what the government is doing is just plain weird.

Based on a wholesale price of 4-5p/kWh then the 4p FiT today compares well with the new nuclear subsidy of approx 5-6p/kWh starting in 2028(ish) (CfD strike price is now 10p/kWh (£100/MWh), so the subsidy is 10p - wholesale rate).

The latest off-shore wind CfD is a fabulous £64/MWh so a subsidy of about 2p/kWh, but not till 2023(ish).

Large scale PV and on-shore wind are cheaper, but these get no subsidy and are therefore being built under PPA's (power purchase agreements) where they sell directly to a large customer at a higher than wholesale price (good for the generator), but lower than retail (good for the customer).

Also, subsidies to the demand side make a lot of sense since they encourage spending that is additional to national supply side investment - homes and businesses raiding their savings for £1k's of leccy generation investment.

Thanks too for your considered response Mart, it's certainly reassuring to read the facts and figures surrounding it all. From my point I struggled to make a case for investing in solar with FIT and Export as they are now. For sure without them I would not, could not, have done so.
With that in mind I think it unlikely that others will find differently once both are removed. It seems such a short sighted decision to something costing us so little yet returning so much.
It wouldn't be quite so bad if investment was being made in other renewable areas, but even the Cardiff bay scheme has been rejected with no indication of a substitute or more cost effective project being put in it's place.
I'm no ecological warrior but in this area I fail to see the direction currently being taken by those making the decisions.:(