Phase Two Consultation

[The Solar King]

I am sorry this is long but it is important. We all need to respond to the phase two consultation. Your voice need to be heard. I would welcome comments and criticism of my thoughts below.


The current post July phase two proposals are very bleak indeed. As an example the assumptions on costs see a 2kw retrofit system installed for £3063 falling to £2400 in 2013. This is clearly bonkers. Even with massive economies of scale, this is unrealistic. It takes no account of the nature of a typical installer business profile, the overheads of regulatory requirement, or how SMEs (especially small) are the engine of growth and recovery. Although this last point would not enter the thinking of DECC.


However one looks at the proposals, the bottom line is lack of budget, created through cock ups and deliberate maleficence of DECC towards renewable energy. The background to this is manifold but I'll try and stay on topic.


We need more money in the budget to survive. The biggest danger is that in identifying methods of creating funding, it is simply taken and used elsewhere or made into a 'saving'.


Export Tariff and FITs


There are proposals to review the export tariff. As present this is little more than symbolic. 3.1p/kwHr is nowhere near the value of exported energy. A figure of 9p has been mentioned.


One other point that has been mentioned is to prevent existing FITs participants gaining a windfall from increases in the export tariff. However, it would be possible to engineer a substitution of FITs payments for increased export payments for existing customers if there is some benefit for the customer.


In terms of increasing the FITs budget, every 1p/kwHr swapped from FITs to Export is 1p times the number of kwHrs currently paid out that could then be transferred into the budget for new installations. The available budget is increased whilst total expenditure is unchanged.


There would need to be a mechanism that created a guaranteed minimum price for exported units that is linked to the price charged by suppliers for energy. As prices increase, further substitution could be made to the point where subsidy/FITs is minimised, as a guaranteed minimum price for exported energy passes grid parity.


There is no reason why the same kind of principal could not be adopted on new installations as well. In this way, as energy prices increase at the inexorable rate that is likely to occur in the next few years, the level of subsidy for all installed systems would fall.


For most domestic installations the likely level of export is at least 70%. Due to the mis-match between production and consumption times, this is unlikely to alter much (even with the introduction of intelligent domestic control/switching systems). If FITs participants are given the opportunity to switch to a new system AND have their export metered (installation of meter at suitable low fixed price), this should provide sufficient incentive to change.


Due to the Court Case, this could not be imposed as it would be a retrospective action. However, giving the option or giving the option to opt out could overcome this.


The challenge is to keep the funds in FITs for as long as they are required. It could become a partially circulating fund. If this can be sold to DECC and politicians, it is maybe just possible to have a level of FIT that sustains the industry.


It should also be borne in mind that a FITs participant is currently able to sell export to who they please. Whilst not an issue now, in terms of windfalls, it could be in the future if nothing is done.


Measurement of required FIT level.


Currently the proposals provide no mechanism (and no transparent mechanism) to establish the level of FIT required as there is no empirical data on installation cost. The proposed FIT levels are driven by an artificial budgetary requirement, not a formula based on costs.


Collection of comprehensive installation costs is almost too easy. Every time a system is registered on the MCS database, the cost of installation should be given. This may be seen to be a two edge sword, but at least everyone would be arguing about fact, not opinion.

Maybe Ted M could put numbers on this from his extensive knowledge and background.

 

[solarcat]

Solar King, thank you for posting this reminder, it really is very important that we all take the time to submit our sensible response to the Phase 2 consultation. Seeing how few responses were received for the phase 1 consultation was absolutely shocking consider how all our businesses and livelihoods have been affected. Some will say "why waste my time, they won't listen anyways", but this is just not a good excuse not to even try. Now than the DECC recognised that FITs are not costing as much as they thought when the Phase 2 consultation was launched, our voice has a higher chance of being herd.
The industry is not ready for 13p in June and we need to ask for more in order to gradually build our path towards grid parity.

 

[moggy1968]

seems fair to me, let me see now, £600 scaffolding, £500 labour for a day, AC side, cable, isolators, conduit etc, lets call it £200. Lead for the roof, maybe £100 at the moment, but rising.
that leaves, let me see now err about £1000 for panels, inverter, DC isolators, cable, registration, sundry expenses, travel. Yeh that should be plenty!!!!!!!!!!!!!!!!
Oh, sorry, I forgot, the business is actually supposed to make a profit isn't it?

txxxxxs

 

[Gavin A]

The current post July phase two proposals are very bleak indeed. As an example the assumptions on costs see a 2kw retrofit system installed for £3063 falling to £2400 in 2013. This is clearly bonkers. Even with massive economies of scale, this is unrealistic.

Hi,

I don't understand where you get those figures from, and am pretty sure you've got mixed up as with the figures I've seen eg in this report are a mix of fixed costs per installation and costs per kWp.

From the medium cost scenario costs from that report, which I believe are the ones DECC are basing their decisions on.

Medium Cost Scenario - 2kWp

January 2012
£1,249 Fixed Cost per install
£2,542 Marginal Cost per kW x 2kW = £5084
£6,333 Total


End 2012 Estimate
£1,187 Fixed Cost per install
£1,907 Marginal Cost per kW x 2kW = £3814
£5001 Total


2013 estimate
£1,127 Fixed Cost per install
£1,621 Marginal Cost per kW x 2kW = £3242
£4369 Total


which may or may not prove realistic, but is a lot different to the figures you posted, unless I've missed something.

 

[Gavin A]

btw, is this thread not better in t'other forum?

Get the story straight away from prying eyes etc

 

[The Solar King]

Figures from Seb Berry at Solar Century. Assumptions being used by DECC.

 

[Gavin A]

Figures from Seb Berry at Solar Century

has he given the source anywhere?

the costs I've given are the costs given in the report linked to from the DECC site as being the report on which they've based their FIT cut proposals

In advance of the publication of the next stage of the FITs comprehensive review, the​

following report[filetypedf filesize: 208.5Kb]

has been completed to update the information used as the basis of the FITs Phase I consultation document in Oct 2011.​

There are also low cost and high cost scenarios, but neither of these come close to matching those figures either.

I'd suggest Seb Berry / Solar Century have got the wrong end of the stick here.

 

[The Solar King]

Will check this out tomorrow.

 

[Gavin A]

actually, tbf they seem to have several different ways of estimating costs in several different sections / documents, none of which really seem to match each other.

I'm going to have a go at reverse engineering their figures to see where they've got them from and try to work out what they all mean, and if they've done anything seriously wrong there when transferring them from one section to another.

AFAIK they ought to all be based on the evidence base they've used, flimsy though it is, and the stated methodology. A quick look seems to indicate that some of the figures don't match up as they should, which I'd think would be fairly serious if this is what they're basing the rest of it on.

 

[Gavin A]

right, I've worked through some spreadsheets, and now see where those figures come from. They're figures for the low cost scenario for the estimate from the end of 2012 and end of 2013.

I do have some major problems with these figures, the first one being that the base figure for the Jan 2012 installed price ought to match up with the actual lowest figure in the evidence from the survey they (Parsons Brinckerhoff) undertook, the prices of which are included at the end of the document I linked to earlier.

The figure produced from adding up the Fixed and Marginal cost elements for Jan 2012 for a 2kWp installation is £584, or 12% lower than the actual lowest price found within the survey.

The explanatory note says

The highest and lowest data points for each system size were grouped in the same way to provide the high and low case costs for each band.

So 2 figures ought to at least roughly match up, but they're miles out.

This is a major problem because this figure forms the starting point for all future figures for the low price scenario, and starting with a figure that is 12% below the lowest figure in their survey is obviously going to produce a scenario that is entirely unrealistic.

On top of this, they then assume with the low price scenario that this scenario, which starts from 12% below the lowest prices already possible, can then be reduced by 26.5% this year, 21.7% next year etc which is significantly greater reductions than either the medium or high price scenario.

IMO this is entirely the wrong way round, as the start point for these low prices is companies that had already slashed their prices to before they were surveyed in January. There is therefore a hell of a lot less left that can possibly be cut from those prices compared to the start point for the medium and high price scenarios, which are largely companies that hadn't really cut their prices at the point they were surveyed.

Basically what this results in is a situation where the lowest prices are supposed to keep dropping faster than the highest prices, so the gap between the lowest and the medium and high prices will grow significantly over the next 2 years according to this. I'd expect the exact opposite to happen, with the high and medium prices being forced down much faster than the current lowest prices.

What this basically amounts to then as others were correctly pointing out is that the low price scenario bears no relation to reality at all, and the prices it envisages are likely utterly impossible and amount to little more than really bad guesswork.

I'll tidy the spreadsheets up and post them up tomorrow.