M
moggy1968
are these installed prices or kit prices?
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Please checkout the new poll we will be pushing hard, and want some good stories to come out of this
result are public - you can change your vote over time, which might genuinely be the case from time to time.
- Thread starter The Solar King
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Discuss Phase Two Consultation in the Solar PV Forum | Solar Panels Forum area at ElectriciansForums.net
T
TedM
"(Price Brinkerhouse)" - that's Parsons Brinckerhoff - but you were close. Other than that I agree with you completely.
corrected, thanks.
OP
- Reaction score
- 292
Sorry, but all this is simply rearranging deckchairs on the Titanic.
Once Seb has got back to me I will let you know the basis of the figures given.
This doesn't alter the position one little bit.
I have run some figures through Pvsol Economic Efficiency Calculation. You will be aware this uses a model to generate a Net Present Value and Payback period.
These are the general criteria I use:
Inflation 3%
Fuel Price Inflation 8% (based on DECC data from 2000 to present)
Fuel cost 13.5p
Panel degradation 15%
Annual operating costs £50.00 (to allow for inverter replacement)
Average annual return on capital employed 4%.
The figure bandied about by the Government as an average return someone should achieve on their investment in PV is 5%. This means that at the break even date you have achieved this or a positive NPV at the end of the assessment period means you have exceeded it.
As I understand Pvsol compounds the payments in calculating the payback period. It is the equivalent of banking the FITs payments and the electricity savings and then earning the same rate of interest as is used for the rate of return on capital employed. This would mean that if you use 5% the payback period is compressed by this calculation. If you reckon 4% is a reasonable figure you would receive in bank interest it makes more sense to use this. Overall it doesn't make enough difference to matter in what I wish to show here.
The yield figure given in Pvsol is the internal rate of return and should not be confused with return on capital.
This uses a south facing unshaded property using climate data based on Sheffield to match SAP. This gives Approximately 1500kW Hrs a year.
This is a 2kW system based on a cost of £5000 inc VAT (there are people out there currently quoting less than this). Payments are FIT or proposed FIT plus 50% export (1.5p)
22.5p Break even at 16.2 Years
18.0p Break even at 20.1 Years
15.0p Break even at 23.6 Years
However, it is likely the tariff period will be reduced to 20 years:
18.0p Break even at 20.1 Years
15.0p Break even at 28.3 Years
If you use a more optimistic fuel price inflation figure, say 5% and a twenty year tariff period
18.0p Break even at 29.9 Years
15.0p Break even at 52.3 Years
Going back to Seb's figures of £3063.00 Lets add VAT and take £3216.00
20 Year Tariff, 8% fuel price inflation:
18.0p Break even at 12.7 Years
15.0p Break even at 15.1 Years
20 Year Tariff, 5% fuel price inflation:
18.0p Break even at 13.2 Years
15.0p Break even at 16.1 Years
No wonder this could be a figure DECC would choose to use.
The trouble is you can perm this any way you like. What I am attempting to show is on a system this size at real world prices 18p is not viable and 15p is a joke. Even on a 4kW system where the cost per kW is £2000.00, 18p is at best marginal and the payback too long for most consumers to consider attractive.
I have low overheads. I can make 21p work for a customer. With lower irradiance levels in Scotland and lower yields than the South of England I am at a 10% disadvantage. 18p would only work if the cost of equipment falls quite a bit further. Not likely in my opinion.
For many contributors to this forum, July is the end unless we can get change in the proposals from the Government.
Discussing the efficacy of figures is this way will not change the outcome. Its just mental masturbation: It may make you feel good but it won't produce anything. (of which I am also guilty by publishing the above).
Please take action.
Please respond to the Consultation. Let them know what it means to you and your business.
Please re-contact your MP and spell it out to them as well.
My original post is to highlight there are things that could be done. I was looking for opinions on my comments and on how we can go forward.
There could be a way forward but only if we take action.
P.S. This discussion should be in the public domain. The more this is seen the more chance there is of more people discussing and understanding the implications of the Government proposals both here and elsewhere. Search engines are a wonderful thing.
Once Seb has got back to me I will let you know the basis of the figures given.
This doesn't alter the position one little bit.
I have run some figures through Pvsol Economic Efficiency Calculation. You will be aware this uses a model to generate a Net Present Value and Payback period.
These are the general criteria I use:
Inflation 3%
Fuel Price Inflation 8% (based on DECC data from 2000 to present)
Fuel cost 13.5p
Panel degradation 15%
Annual operating costs £50.00 (to allow for inverter replacement)
Average annual return on capital employed 4%.
The figure bandied about by the Government as an average return someone should achieve on their investment in PV is 5%. This means that at the break even date you have achieved this or a positive NPV at the end of the assessment period means you have exceeded it.
As I understand Pvsol compounds the payments in calculating the payback period. It is the equivalent of banking the FITs payments and the electricity savings and then earning the same rate of interest as is used for the rate of return on capital employed. This would mean that if you use 5% the payback period is compressed by this calculation. If you reckon 4% is a reasonable figure you would receive in bank interest it makes more sense to use this. Overall it doesn't make enough difference to matter in what I wish to show here.
The yield figure given in Pvsol is the internal rate of return and should not be confused with return on capital.
This uses a south facing unshaded property using climate data based on Sheffield to match SAP. This gives Approximately 1500kW Hrs a year.
This is a 2kW system based on a cost of £5000 inc VAT (there are people out there currently quoting less than this). Payments are FIT or proposed FIT plus 50% export (1.5p)
22.5p Break even at 16.2 Years
18.0p Break even at 20.1 Years
15.0p Break even at 23.6 Years
However, it is likely the tariff period will be reduced to 20 years:
18.0p Break even at 20.1 Years
15.0p Break even at 28.3 Years
If you use a more optimistic fuel price inflation figure, say 5% and a twenty year tariff period
18.0p Break even at 29.9 Years
15.0p Break even at 52.3 Years
Going back to Seb's figures of £3063.00 Lets add VAT and take £3216.00
20 Year Tariff, 8% fuel price inflation:
18.0p Break even at 12.7 Years
15.0p Break even at 15.1 Years
20 Year Tariff, 5% fuel price inflation:
18.0p Break even at 13.2 Years
15.0p Break even at 16.1 Years
No wonder this could be a figure DECC would choose to use.
The trouble is you can perm this any way you like. What I am attempting to show is on a system this size at real world prices 18p is not viable and 15p is a joke. Even on a 4kW system where the cost per kW is £2000.00, 18p is at best marginal and the payback too long for most consumers to consider attractive.
I have low overheads. I can make 21p work for a customer. With lower irradiance levels in Scotland and lower yields than the South of England I am at a 10% disadvantage. 18p would only work if the cost of equipment falls quite a bit further. Not likely in my opinion.
For many contributors to this forum, July is the end unless we can get change in the proposals from the Government.
Discussing the efficacy of figures is this way will not change the outcome. Its just mental masturbation: It may make you feel good but it won't produce anything. (of which I am also guilty by publishing the above).
Please take action.
Please respond to the Consultation. Let them know what it means to you and your business.
Please re-contact your MP and spell it out to them as well.
My original post is to highlight there are things that could be done. I was looking for opinions on my comments and on how we can go forward.
There could be a way forward but only if we take action.
P.S. This discussion should be in the public domain. The more this is seen the more chance there is of more people discussing and understanding the implications of the Government proposals both here and elsewhere. Search engines are a wonderful thing.
Last edited:
T
TedM
DECC don't take panel degradation into account, use 15.4p for electricity offset cost and include benefits up to year 35. Simple to get a better ROI if you skew the data like that.
OP
- Reaction score
- 292
Ted
It doesn't alter the outcome. The ROI calculation in PVsol uses the time value of money to produce an NPV using a DCF method. Householders understand the comparison with bank interest or bonds and even shares. In all cases, they have their capital (hopefully) intact at the end of the investment period. As stated unless they bank payments and savings in fuel cost the capital sum is liquidated as it has been taken as income and savings.
This doesn't effect whether or not the proposals in phase two are viable or not.
I am not going to join the orchestra on the Titanic and fiddle away as the ship sinks. I want to stay in this business. I want to provide customers with what they want. I want the Government to provide a framework that allows me to do so and prosper.
Whether or not DECC take panel degradation into account or not is likely to affect the outcome of the big picture. Where it may come into play is if we could get to a position of an agreed formula over digression based on factual information and not some consultants report cobbled together from meagre unsubstantiated data in less than two weeks.
All this means finding ways of putting more money in to the FITs budget.
It doesn't alter the outcome. The ROI calculation in PVsol uses the time value of money to produce an NPV using a DCF method. Householders understand the comparison with bank interest or bonds and even shares. In all cases, they have their capital (hopefully) intact at the end of the investment period. As stated unless they bank payments and savings in fuel cost the capital sum is liquidated as it has been taken as income and savings.
This doesn't effect whether or not the proposals in phase two are viable or not.
I am not going to join the orchestra on the Titanic and fiddle away as the ship sinks. I want to stay in this business. I want to provide customers with what they want. I want the Government to provide a framework that allows me to do so and prosper.
Whether or not DECC take panel degradation into account or not is likely to affect the outcome of the big picture. Where it may come into play is if we could get to a position of an agreed formula over digression based on factual information and not some consultants report cobbled together from meagre unsubstantiated data in less than two weeks.
All this means finding ways of putting more money in to the FITs budget.
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No it's not.
If the government isn't basing the figures used in the consultation on the evidence it states it is using in the way that it states it is using it then this would make the consultation inherently flawed and could be used as evidence for a legal challenge if needed if the government relied on these figures to justify a bigger than acceptable FIT reduction.
Alternatively, if spotted and pointed out clearly enough at the consultation stage by enough people, it's possible the government will see sense and head off any court challenge by amending their rates accordingly.
no need to do this on my behalf, I've eventually sussed them out.
Basically what I'm saying is that if you're going to argue against the figures, it strengthens your case a lot if you know exactly how they're come up with the figures, and if there are signficant flaws in that methodology that you can point to as evidence of why their figures are unrealistic.
Otherwise they'll simply state that they've taken independent advice on the figures etc etc and ignore us all again (may still happen, but it makes it a lot riskier for them to do so).
OP
- Reaction score
- 292
Gavin
This is OK but largely semantics.
What are you going to do about it?
The whole point of what I am saying is we ALL need to to respond. Respond on the basis of whatever data you wish to use but please respond.
Understand that the only way we can move forward is with more money in the budget.
Current policy is likely to continually pull installations forward due to rushes to meet real or false deadlines making the possibility of a much lower FIT all the more likely.
Until I hear back neither of us know whether or not you have sussed it out as you make the assumption the figures I quoted originate from the document you have used and are being used in the manner you think they are being used. Semantics again. Without substantiation we are no better than DECC.
This is OK but largely semantics.
What are you going to do about it?
The whole point of what I am saying is we ALL need to to respond. Respond on the basis of whatever data you wish to use but please respond.
Understand that the only way we can move forward is with more money in the budget.
Current policy is likely to continually pull installations forward due to rushes to meet real or false deadlines making the possibility of a much lower FIT all the more likely.
Until I hear back neither of us know whether or not you have sussed it out as you make the assumption the figures I quoted originate from the document you have used and are being used in the manner you think they are being used. Semantics again. Without substantiation we are no better than DECC.
OP
- Reaction score
- 292
Gavin
Having spoken to Seb, you are right in your analysis. The problem is DECC are using the low cost scenario as the basis of their deliberations.
I have major problems with the use of ROI for domestic customers. In general they are not familiar with the concept. They need an understandable comparison with domestic savings products. 5% ROI is not the same as 5% bank interest. ROI is completely right for commercial installations.
In a written reply to a question in Parliament it was admitted that the Parsons Brinckerhoff document is based on data from only 11 companies. This makes it totally suspect from the point of view of statistical accuracy.
Without empirical data, we are stuffed if DECC continue to use this report.
My own analysis starting at the micro level suggests that a 4kW system needs Feed-In Tariff support for considerably less than 20 years if we can continue at 21p plus 1.5p export.
Going back to my original post, without collection of empirical data on which to base decision making this consultation will not provide a satisfactory outcome.
From an up to 4kW standpoint this is what I would want from this consultation:
Increase in Export tariff to 9p for new installations with Feed in tariff reduced pro-rata to retain 22.5p total
Feed In Tariff of 18p until April 2013
Reduction in Tariff period to 20 Years
Collection of cost data via registration of systems on MCS database.
Offer to existing FITs participants to swap FITs payments for export payments as set out in original post to free up additional budget.
Use of time between now and April 2013 to develop a stable and equitable FIts system based on empirical data. Use this time frame to develop a system that adequately supports larger systems, that can be attractive to investors to attract the necessary capital.
I haven't got the macro figures but am hopeful this would reduce the required budget sufficiently to allow the industry to move forward and meet Mr Barker's 22gW target.
Again, it is really important we all respond to this consultation and let our MPs know of the threat it poses to our jobs and the industry.
Having spoken to Seb, you are right in your analysis. The problem is DECC are using the low cost scenario as the basis of their deliberations.
I have major problems with the use of ROI for domestic customers. In general they are not familiar with the concept. They need an understandable comparison with domestic savings products. 5% ROI is not the same as 5% bank interest. ROI is completely right for commercial installations.
In a written reply to a question in Parliament it was admitted that the Parsons Brinckerhoff document is based on data from only 11 companies. This makes it totally suspect from the point of view of statistical accuracy.
Without empirical data, we are stuffed if DECC continue to use this report.
My own analysis starting at the micro level suggests that a 4kW system needs Feed-In Tariff support for considerably less than 20 years if we can continue at 21p plus 1.5p export.
Going back to my original post, without collection of empirical data on which to base decision making this consultation will not provide a satisfactory outcome.
From an up to 4kW standpoint this is what I would want from this consultation:
Increase in Export tariff to 9p for new installations with Feed in tariff reduced pro-rata to retain 22.5p total
Feed In Tariff of 18p until April 2013
Reduction in Tariff period to 20 Years
Collection of cost data via registration of systems on MCS database.
Offer to existing FITs participants to swap FITs payments for export payments as set out in original post to free up additional budget.
Use of time between now and April 2013 to develop a stable and equitable FIts system based on empirical data. Use this time frame to develop a system that adequately supports larger systems, that can be attractive to investors to attract the necessary capital.
I haven't got the macro figures but am hopeful this would reduce the required budget sufficiently to allow the industry to move forward and meet Mr Barker's 22gW target.
Again, it is really important we all respond to this consultation and let our MPs know of the threat it poses to our jobs and the industry.
Last edited:
M
moggy1968
In order to be able to provide payments based on exports you need meters cabable of measuring export, which at present the vast majority of installations don't have.
Mr Barkers 22GW target wouldn't have been achieved even at 43.3p based on the number of installations completed so far so how this is expected to be achieved by making PV less attractive to customers is beyond me, oh, actually, I know, by supporting large scale solar installations provided by the big 6 energy companies which brings us back to
err
Barker isn't interested in Small Scale Energy Production
Barker is in the pockets of the big 6
The Government doesn't want SSEG and they aren't really interested in arguments to support SSEG. The only arguments they are interested in is ones that support the ending of SSEG and a move to centralised energy production. The fact that those arguments may be fundamentally flawed (or downright lies) is irrelevant to them.
Mr Barkers 22GW target wouldn't have been achieved even at 43.3p based on the number of installations completed so far so how this is expected to be achieved by making PV less attractive to customers is beyond me, oh, actually, I know, by supporting large scale solar installations provided by the big 6 energy companies which brings us back to
err
Barker isn't interested in Small Scale Energy Production
Barker is in the pockets of the big 6
The Government doesn't want SSEG and they aren't really interested in arguments to support SSEG. The only arguments they are interested in is ones that support the ending of SSEG and a move to centralised energy production. The fact that those arguments may be fundamentally flawed (or downright lies) is irrelevant to them.
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