Is yet another solar PV orders rush expected in Q1 2012?
Here is a UK solar panel grants timeline for 2012…
AGAGAGAHHHHHH (The Tarzan Yodel)! Today’s sketch map of UK’s fast-evolving solar subsidy jungle, and the possibility that DECC will (again) bungle in that jungle.
A shedload more of solar restrictions / added value opportunities (depending on your viewpoint!) appear to be on the way. Here is a brief introduction, plus a likely timeline. Please bear in mind that there are two kinds of solar panels:
- solar photovoltaics (solar PV) generate electricity and
- solar thermal panels heat water for washing and bathing.
We supply and fit both kinds of solar panels and this summary covers both, starting with solar PV.
Solar PV opportunity. Another solar PV orders rush is expected in the first quarter of 2012! People installing solar PV in the wintry 110 day window between the 12th Dec 2011 and 1st April 2012 will be no fools! This is because, by getting their solar PV systems installed before April Fools Day (and preferably well in advance) they can avoid a compulsory whole house energy upgrade requirement to “EPC level C” which, according to government will affect about 80% of homes. The cost of this energy performance upgrade is likely to be several thousand pounds according to DECC (and may even be over £10,000 for older homes).
http://www.solartwin.com/another-solar-pv-orders-rush-expected-in-q1-2012Plenty. Today (5 Dec) a wee ahead of the 43.3p FIT cuts date even the MCS website went on a go-slow, despite 6 weeks notice to get it up to speed. Then there is the possibility that the FIT review changes the playing field. And that next week’s appeal by Friends of The Earth to the pre-emptive timing (discussed later).
The EPC bottleneck. Since it’s really important to know what this EPC level C proposal really means, here is more about this from the DECC FIT consultation paper (Feed-in tariffs scheme: consultation on Comprehensive Review Phase 1 – tariffs for solar PV) about the possible costs of achieving EPC level C.
How to get up to EPC level C? DECC say that reaching EPC level C may require the installation of some or all of the following measures:
- loft insulation
- cavity wall insulation
- heating controls
- hot water cylinder insulation
- Replacement boiler
- solid wall insulation (primarily for pre-1919 houses).
Phew – quite a list!
And the cost? Apart from the one-off EPC survey cost of about £50, DECC estimate that the total cost of installing these energy efficiency measures could be up to £5,600, depending on the base-level energy performance of the building (costs would be higher in some cases, for example properties with solid walls). DECC say illustrative costs to reach Energy Performance Certificate: Level C are:
- £2,500 for a detached house currently rated as D that already has loft insulation and insulated cavity walls, but where the boiler needs to be replaced with a condensing boiler.
- £3,600 for a detached house with cavity walls currently rated as F where loft insulation, cavity wall insulation and a replacement boiler would be needed;
- £14,000 for a semi-detached house with solid walls currently rated as D where solid wall insulation and double glazing would be needed.
The penalty for not getting your EPC level C? DECC’s new “EPC level C” rule is proposed to come in for solar PV installations fitted after 1 April 2012. It is currently proposed that people installing solar PV after 1 April 2012 who do not upgrade to level C within 12 months will end up getting get 9p FIT rather than a 21p FIT!
Bungle potential? Plenty. What if a new EPC is different from today’s? What if DECC fail to meet their deadline, a recurrent theme.
Conclusion: If you suspect the chance of yet another solar PV rush (and another potential solar PV supply shortage / price hike) in February and March next year (as we do!), then please buy solar PV now.
Comment: why impose all these preconditions on people who want to buy solar PV? Well, from an individual consumer point of view, these “post 1 April 2012 requirement to energy-upgrade” as a likely condition of getting the higher rate of FIT (ie 21p rather than 9p) may be both annoying and costly, but from a national energy target position, of course, they make very good sense because this linkage levers in a lot of extra energy performance out of the FIT funding pot. Dear Reader, you are, of course free to comment on the validity of this linkage, or on any other relevant matters, to DECC in its FITS cuts consultation (see link below).
So what happens and when? As best as I can find out, the current proposed UK solar panel subsidy events timeline is:
KEY DATE: Monday 12 December 2011. UK’s popular PV Feed in Tariff (FIT) is proposed to drop from 43.3 pence per unit of energy generated to 21 pence. This is a drop of 51.5%. Although this percentage FIT CUT looks alarming, we think that the net benefit as a “total customer proposition” is however, only 15-20% less attractive than when the PV FIT was first launched in 2010, due to a combination of (a) price drops of installed systems since the launch of about 30% (mainly due to economies of scale and labour efficiencies) and (b) further savings via more costly “displaced electricity” because of price rises of about 20% (mainly due to fossil fuel prices rising). A relevant Department of Energy and Climate Change (DECC) webpage addressing these financials and related issues is here.
KEY DATE: Friday 23 December 2011. Close date of the DECC consultation of the FIT cuts. If you want to comment, and anyone can comment, of course, perhaps to ask how on earth any democratic government can get away with cutting a tariff before the actual cutoff date of the consultation about cutting it (!), or, to ask for sincere consultations, or rather more constructively, to ask for a more progressive taper, rather than a cliff-edge FIT cut future, then please feel free to do so here.
Bungle potential. Could go right up into the treetops. What if the courts say that the government is simply not allowed to have sham consultations? Then will installations fitted after 12 Dec be treated as eligible for 43.3p instead of 21p? Nobody really knows.
KEY DATE: Approx Early January 2012. The Renewable Heat Incentive (RHI Domestic: Phase 2) consultation on how much to fund solar heating (our other solar technology) is expected to start. This announcement is likely to inspire more interested in this technology, which has currently been eclipsed by PV because of the FIT being so high. But it may not boost the market if its proposed calculation methodology of how a particular solar thermal technology will be funded is unclear. We have asked for net energy to be funded since this is the real energy benefit. Defined as annual solar energy MINUS the energy used by pumps and controls, the majority of the solar industry opposes net energy because they are resistant to change. They fact that they brazenly expect the taxpayer to non-existent energy benefits surely says something about them…
Bungle potential. This could yet start off late of half-cocked, if the secretive and powerful market-makers with the keys to the £860M grant gateway, MCS, decide to block commonsense approaches such as net energy subsidy.
KEY DATE: 1 April 2011. The actual tariff of the PV FIT does not necessarily change now (apart from a possible inflation uprating) but the required energy and cost conditions surrounding its eligibility DO get tougher.
The timing issue here is that it is likely that some minimum home energy efficiency requirement such as “EPC level C” must be met within 12 months. (If not met in that time then the FIT level may fall to 9p. This all begs two questions of: what is an Energy Performance Certificate for a home and what exactly is Level C (EPC level C) ?
What are EPC’s? EPCs carry ratings that compare the current energy efficiency and carbon dioxide emissions with potential figures that the building could achieve. Potential figures are calculated by estimating what the energy efficiency and carbon dioxide emissions would be if energy saving measures were put in place. The rating measures the energy and carbon emission efficiency of the building using a grade from ‘A’ to ‘G’. An ‘A’ rating is the most efficient, while ‘G’ is the least efficient. The average efficiency grade for an existing dwelling in England and Wales is ‘D’. There are two methodologies in use for measuring the energy efficiency of domestic and non-domestic buildings respectively. All buildings of the same type are measured using the same methodology, so the energy efficiency of different properties can be compared. EPCs also recommend measures to improve the energy performance of a building, with indicative costs.
Why level C? Because D is too low. Setting a requirement at EPC level C or above would mean upgrades would be required for the vast majority (86%) of dwellings before they would be eligible for the standard solar FIT tariff 0f 21p per kilowatt-hour (unit) of solar energy generated. Energy Performance Certificates (EPCs) give information on how to make a building more energy efficient and reduce carbon dioxide emissions. Nowadays an EPC is already required for virtually all buildings whenever they are built, sold or rented. Currently, obtaining an EPC for a home costs around £50. This house performance linkage requirement would force all users of electricity-making microgeneration (including solar PV) to get EPC’s of C or better.
Just to fertilise the lack of certainty (!) a new beefed-up and redesigned EPC is scheduled to be introduced from 1 April 2012. This would additionally include information about the Green Deal (see below) and which recommended measures are likely to be eligible for Green Deal finance.
KEY DATE: 31 July 2012. This is the last day of the £300 solar thermal installation subsidy under the Renewable Heat Premium Payments Scheme. A summary of this scheme, which is currently running is here. The date may in fact be earlier if the funds run out earlier. The deal is, you get a voucher from here and you must redeem it against a solar thermal installation within 2 months. In addition, your house must be your main home and it must also have basic energy efficiency measures such as 250 mm of loft insulation and cavity wall insulation, where these are practical.
Stand by for big changes… Up to about October 2012, if DECC’s proposals go as planned, then the solar market will really only be accessible to a limited number of “cash-available” people who have the upfront cash or low cost loan facility available to allow them to fund their chosen solar and required energy efficiency measures. After this point, market access is expected to become wider because…
KEY DATE: About October 2012, the Green Deal comes in. This potentially extends the solar market into a wider consumer segment and is seen as a socially progressive measure. The Green Deal is a (note: yet to be finalised) clever way of paying for a wide range of home energy efficiency measures via your energy bills. The trick is to, in theory, drop bills upfront by putting in energy efficiency measures such as insulation and solar panels, etc, but in practice, not to drop them as much as planned and to use the difference to fund the investment in these measures. This is proposed as a win-win, pay-as-you-go way of greening millions of British Homes. If it works, it could be an amazing scheme. Lets hope the energy companies don’t get their hands on it!
About October 2012, the Domestic Renewable Heat Incentive (= RHI = subsidy for renewable heat such as solar thermal, for example) comes in. This is virtually certain to have the same energy prerequisites (EPC level C) as the FIT. But the RHI is far better funded (£860M for the RHI vs £280M for the FIT.)
Bungle potential? Amazonic. After all, the RHI is already several years late. If it is to dovetail in with the Green Deal, will the Green Deal work at all? Some in the industry say it is a car crash waiting to happen. And let’s at least hope UK’s 6 main energy companies don’t get their oligolpoistic hands on it. Beyond the superficiality of greenwash, they have minimal commercial incentive to sell less energy.
On retro-eligibility, DECC say that people who have installed solar heating kit under the Premium Payments will be eligible for support through the RHI providing they meet the eligibility criteria of the full RHI scheme, as will anybody else who has installed eligible equipment since 15 July 2009.
Conclusion: It seems that, if you have the cash, the sooner you go ahead with solar right now (preferably both solar PV and solar thermal together, in order to save duplicate scaffold costs) the better. OK, we would say that, wouldn’t we?…
But it really does make sense to choose solar now. Call us now: 0344 567 9032 and ask for a free quote. Thanks for taking an interest!
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