Monthly Archives: February 2012

FiTs, RHI, ECA, AIA and FYA

HM Treasury have published the final proposed Finance Bill 2012 changes that will affect businesses who wish to make use of the First Year Allowances (FYA) of Enhanced Capital Allowances (ECA) and Annual Investment Allowances (AIA) in relation to plant and machinery that can also benefit from Feed-in Tariff (FiT) and Renewable Heat Incentive (RHI) subsidies.

A short explanation of the changes is: you can’t have both a tariff income, from either FiTs or RHI, and also claim a FYA write-down for the same plant.

The relevant section starts on page 480 of this document: Finance Bill 2012 – draft clauses and explanatory notes

How realistic is Barker’s dream of 22GW of PV

A few days ago DECC Energy Minister Greg Barker tweeted:

But just how realistic is it to expect that level of PV to be installed in the UK over the next few years?

Table 14 in DECC’s FiT consultation 2A Impact Assessment shows the predicted cumulative installed capacity spread across the next 5 years, as the first stage to get to 22GW, as being:

2011/12 1,300 MW
2012/13 1,800 MW
2013/14 2,700 MW
2014/15 4,300 MW

and

2020/21 22,000 MW

The first comment to make is that the 22GW ‘target’ is actually for 31st March 2021 rather than 2020.

Extrapolating the missing years to 2021, using a simple straight-line method to extend 4.3 GW to 22GW, gives the following:

2015/16 7,250 MW
2016/17 10,200 MW
2017/18 13,150 MW
2018/19 16,100 MW
2019/20 19,050 MW
2020/21 22,000 MW

At the current average size for installed PV systems of 3.5kW would require nearly 6 million systems to be installed between 1st April 2012 and 31st March 2021 to achieve 22 GW.

Between 1st April 2015 and 31st March 2021 just under 850,000 PV installs will be required each year. That’s almost four times the number that have been installed in the first two years of FiTs.

Using DECCs predicted figures (from the much criticised Parsons Brinckerhoff report ‘medium’ data – Tables A3 fixed and A4 marginal) for what PV should cost over the coming years (again basing this on average size of 3.5kW per installation) gives the following investment required by UK households:

2012/13    500 MW = £0.9 billion
2013/14    900 MW = £1.5 billion
2014/15  1,600 MW = £2.5 billion
2015/16  2,950 MW = £4.3 billion
2016/17  2,950 MW = £4.0 billion
2017/18  2,950 MW = £3.8 billion
2018/19  2,950 MW = £3.5 billion
2019/20  2,950 MW = £3.3 billion
2020/21  2,950 MW = £3.2 billion

This totals £27 billion. I wonder where that amount of cash is going to come from over the next 9 years.

The first checkable milestone requires that a total of 1,300 MW be installed by the end of this March. I’ll be keeping a close eye on this.

New FiTs

DECC have released their response to the PV Feed-in Tariff consultation that ended last 23rd December.

The main changes that will apply to new systems installed from April 1st are:

- generators will need to have an EPC ‘D’ rating for their property in order to be able to claim the full tariff. Without this a 4kW PV system will be paid just 9p per kWh.
- aggregators (owners with muti-site systems) will only get 80% of the eligible tariff for their generation if they have more than 25 installations.
- the 21p rate will apply to 4kW installations from 3rd March 2012, and possibly from 12th December 2011 if DECC win their Supreme Court challenge

Alongside this DECC have also released the next stage consultation for Feed-in Tariffs, labelled Phase 2A. More analysis on this later.

Update – John Maslen at GEN has produced an excellent summary of all the proposals.

Barker’s dream

DECC minister Greg Barker tweeted this afternoon that his ambition for a reformed Fit was to deliver 22GW of PV by 2020.

This would require 2.65GW to be installed every year from where we are now. That is 53MW installed per week (x 50 weeks). That’s a little more than half the level of installs in the w/e 4/12/11. And at £2/Wp would require householders to invest £5.3 billion a year.

Wonder where that is going to come from? The total current domestic PV installed (approx 800 MW in just under 2 years) would have cost £3.2 billion at £4/Wp.

Latest DECC PV price research

Just published at Solar PV Costs Update is the latest Parsons Brinckerhoff study on UK PV installation prices.

It seems pretty certain that DECC will have used these figures in setting the post April tariffs. They have a prices of:

one-off domestics
2kW £6,584
3kW £7,949
4kW £10,170

roof-renter
4kW £6,600

Given these prices I would be really surprised if the proposed aggregator reduced tariff of 80% stays that high.