Solar - any time left?

M0ney

Martyn1981 wrote: »

I agree, but just for clarification, the 10p/kWh for HPC includes the sale price of the leccy. The subsidy element is 'only' about 5p/kWh.

CfD's set a strike price, which the company gets 'topped up too', so if they sell at the expected wholesale price of approx £50/MWh in the late 2020's early 2030's, then they get a top up of £50/MWh. If the market price is lower, they get more, if the price is higher they get less, and if they sell at above the strike price, then the extra gets paid back into the LCF subsidy pot.

So on average they will get about 5p/kWh (based on NAO predictions).

The outgoing PV FiT rate is less than 4p/kWh. [Note the export payment is not a subsidy, and can be equated to the selling price of HPC's leccy.]

So, the government is to remove a subsidy to households, that can deliver clean leccy today, and is already cheaper than it intends to pay for nuclear in 10yrs time.

Also worth note.

The FiT is for 20yrs, whilst the HPC CfD is for 35yrs (RE CfD's are for 15yrs). Whilst HPC will most likely generate for up to 60yrs, I think it's fair to say that PV won't need a subsidy in 20yrs time, so 20yrs is a max, v's the 35yrs for nuclear.

Demand side PV generates on the .... well, demand side, so losses across the HV and LV grids are saved. These are about 8%, so through either export or offset, demand side generation displaces approx 108% of large scale supply side generation.

Demand side generation, especially from PV, can benefit long term from storage. That means daytime PV generation displacing demand from the grid in the early evening - not only is peak demand more costly, pushing up the average price of leccy, but it's also the most carbon intensive, since that's when more and more generation capacity is brought on line to meet demand. If the demand side invests in storage, then everyone benefits from this but without having to pay/invest in supply side storage (unless grants are offered for storage, in which case we will all pay a contribution, rather than for all of it).

The FiT subsidy goes straight back into the UK economy, whereas the HPC subsidy will go to the owners/investors which are the Chinese government and the French government (owners of EDF), thus leaving the UK economy.

PV (and other RE) on the demand side is educational, aspirational, and might one day even become required under new buildings regs.

Thanks for that, interesting points there, I hope they do change their mind and I have written to MP about it but I can't see anything coming of that.


By the way what does CfD mean?

jimjames

ballisticbrian wrote: »

Is it possible to explain in a nut shell what I have missed out on in terms of the tariff and any other incentives. Not that I had the money back then, but I mean, who like to arrive at their holiday destination, and everyone tells you they booked last year and got 50% off???

My system cost £9000 in 2011, the FIT I currently get is 52.75p per kW I generate plus 3.72p for everything we export to the grid. Current rates are significantly lower than this but equally installation costs have come down by 50% or so too.

Martyn1981

M0ney wrote: »

T
By the way what does CfD mean?

Sorry, sometimes I go all acronymy!

Over the years there have been 3 main subsidy schemes, the FiT, feed in tariff for demand side generation, the ROC, renewable obligation certificates for supply side (now ended), and the CfD, contract for difference. All are paid out of the money raised by the green levy on energy bills.

The CfD is interesting as it guarantees an income level (the strike price), which is made up to on top of the price the leccy is sold at* or even brought down to, if the sales price is higher than the strike price.

*To prevent manipulation, the actual sell price isn't used, but the market average price at the time, otherwise companies with leccy supply businesses could sell cheap to the supplier, and make up the difference from the CfD, whilst the supplier arm makes more profit from the cheap leccy.

You might, or might not, find this interesting, but a falling average leccy price means that the subsidy element gets bigger. When HPC was agreed the average wholesale price was estimated around £80/MWh, but since then the NAO has massively reduced its expected price as generation costs (across the board) have looked better and better (see page 39).

The effect is that whilst the strike price hasn't changed, the original estimates of a £6bn subsidy have now grown to about £44bn as the margin between average price and strike price has grown by about £25/MWh in just 4yrs of NAO estimates.

Edit - Just to say, there have been calls for the government to issue subsidy neutral CfD's to the on-shore wind and PV industries. The idea here is if there truly isn't any subsidy monies left, then issuing contracts at about £50/MWh would not add to bills, but the guaranteed price would provide the confidence needed by financers of such schemes and we could see a large deployment of clean generation very quickly, but still constrained by CfD contracts to prevent an oversupply. M.