feed-in tariffs - making sunlight a cash crop - philip wolfe (ownenergy)
DESCRIPTION
presentation on the feed-in tariff, solar pv and suitability for farm buidlingsTRANSCRIPT
Feed-In TariffsMaking sunlight a cash
cropPhilip Wolfe
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Feed-In Tariffs - how to benefit
Feed-In Tariffs (FITs) - the fundamentals
Tariff levels for PV
Who gets the cash & where it comes from
How to ensure FITs work for your farm
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The UK’s Feed-In Tariffs
The three main value streamsGeneration tariffSavings on imported energyExport bonus
Eligible technologies and tariffsAdministrationRenewable Heat
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The 3 main value streams
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Total benefit to owner =Generation tariff +Saving on reduced imports
+Export bonus
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3
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The Generation Tariff
Paid for every kWh generated;whether used by the system owneror exported back to the grid
Level depends on:The renewable energy technologyThe capacity of the systemThe date of installation
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FIT Eligible technologies
Biogas from anaerobic digestionHydro-powerSolar photovoltaics
Retrofit in existing propertyNew-build (properties not yet occupied)Stand-alone (systems for pure grid-feed)
Wind powerMicro-CHP (non renewable)
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Eligible capacities
The FITs cover installations up to 5MWExcept Micro-CHP only up to 2kW
The tariff level depends on:So-called ‘Total Installed Capacity’The capacity is per ‘site’Additions based on cumulative capacity
Installations must be accreditedSystems under 50kW – MCS Systems over 50kW – ‘ROO-FIT’
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Ineligible installations
Other RES-E technologies:Biomass, geothermal, tidal, wave, biofuelHopefully to be reconsidered on review
Systems over 5MWSecond-hand and refurbished systemsPre 15th July ‘09 installations
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FIT tariff levels
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Energy source Scale Generation tariff p/kWh
Duration (years)
AD ≤500kW 11.5 20AD >500kW 9.0 20Hydro ≤15 kW 19.9 20Hydro >15 - 100kW 17.8 20Hydro >100kW - 2MW 11.0 20Hydro >2kW - 5MW 4.5 20Micro-CHP <2 kW 10.0 10Solar PV ≤4 kW new 36.1 25Solar PV ≤4 kW retrofit 41.3 25Solar PV >4-10kW 36.1 25Solar PV >10 - 100kW 31.4 25Solar PV >100kW - 5MW 29.3 25Solar PV Standalone 29.3 25Wind ≤1.5kW 34.5 20Wind >1.5 - 15kW 26.7 20Wind >15 - 100kW 24.1 20Wind >100 - 500kW 18.8 20Wind >500kW - 1.5MW 9.4 20Wind >1.5MW - 5MW 4.5 20Existing systems transferred from the RO 9.0 to 2027
PV
Retrofit ≤4kW 41.3pNew build ≤4kW 36.1p
Retrofit and new build
4-10kW 36.1p10-100kW 31.4p
100kW-5MW 29.3pStandalone ≤5MW 29.3p
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The Export Tariff
For every kWh exported to the gridThe beneficiary gets the generation tariffPlus a premium for export, as follows
A fixed rate of 3p/kWh has been setBut you can opt out and negotiate
a better price from an electricity supplierOpt-out decisions can be made each year
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Duration of tariffs
Tariffs are fixed for 20-25 yearsExcept micro-CHP for 10 yearsPV is 25 years all others are 20
Tariffs are index-linked to the RPIBoth generation and fixed export tariffsNew rates will be announced annually
For new installations tariffs change:Subject to degressionMaybe at reviews (5-yearly from 2013)
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Tax treatment
Householders don’t pay Income Tax onThe generation nor the export tariffs... provided that it is for“households who use renewable technology to
generate electricity mainly for their own use”
Business has no special tax exemptionbut can offset costs against profit as usualNo Enhanced Capital Allowances for PV (yet)
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How the tariffs were set
To achieve an “average 5-8%” returnWould equate to roughly 12-year ‘payback’
We find that typical systems:Recover their costs ~ twice over the periodThat is equivalent to a 12-year payback
We find that the best systems:Recover their costs 2½ to 3 timesEquivalent to less than 10-year payback
Index-link & tax break improves all this13th October 2010
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Where the money comes from
The scheme is set in law, butThe government doesn’t pay for itIt comes from a levy on electricity billsIt’s collected and paid out by suppliers
Who have a ‘levelisation’ system to share the costs fairly between them
It is now part of their licence conditionsOnly small suppliers can opt outOthers are called ‘FITs licensees’
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Who the money goes to
The beneficiary is the system ownerHe can specify a ‘nominated recipient’
to whom is tariff payments can be made
He nominates (and can change)which FITS licensee will pay over the tariff
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Scheme administration
Scheme is administered by Ofgem, whoMaintain the register of FITs installationsOversee the levelisation processAccredit systems over 50kWHave issued guidelines on how it works
For more details:www.FITariffs.co.uk
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Issues with the FITs
Public awarenessLittle government promotion
ConsentingSmall systems ‘permitted development’Larger developments less certain
Tariff levelsFinancing
No official finance availableFinance providers’ knowledge; conditions
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Project-specific issues
Maximum capacity 5MWAccreditation required
Pre-accreditation under ROO-FIT?Must use conforming meterSelection of ‘FITs Licensee’Use of nominated recipientTiming: Degression; seasonality
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Ownergy Plc
Your renewable energy and tariffs expertAdvise you in selecting the appropriate optionsDesign and procure suitable systemsStructure projects for financingSupervise installation & commissioningRegister and manage the tariffs
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Government growth forecast
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kW kWkW
Expected numbers of installations by size Source: DECC
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PV FITs installations to date
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Gross installed capacity to 2009 = 32 MW!
Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-100
5
10
15
20
25
Non-residentialResidential
PV
Meg
awat
ts c
umul
ativ
e
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One of UK’s first solar parks
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AD
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One of UK’s first solar farms
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All this assumes ...
... that the Government doesn’t tinker with the tariffs in the present Spending Review
They shouldn’t (it isn’t public spending)But just to be sure; sign up at:
wesupportsolar.net
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Any questions?
WebsitesAbout the Feed-In Tariffs:
www.fitariffs.co.uk
About the Renewable Heat Incentive:
www.rhincentive.co.uk
About Ownergy:www.ownergy.co.uk
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Feed-In Tariffs
Philip Wolfe