Ritchie likes it so where\’s the catch?

I have to admit, took me a little bit of time to work it out. So, there\’s this, Ritchie and Colin Hines. So there has to be something wrong with it. Larry Elliott\’s piece.

Ten thousand homes fitted with solar panels for £100 million?

That\’s bloody cheap. £10,000 a house? If only it really was that cheap to power a house with solar cells. We\’d all be using them, wouldn\’t we?

So, I had a look around to see what the catch was.

Aaaahhh.

The scheme is the first major project in the UK to use the \’feed in tariff\’

Average household annual usage is 4,800 kWh, subsidy to solar PV on the feed in tariff is about 35 p (roughly 10 p for conventionally produced, solar PV gets 45 p or so) so that\’s £1,680 per household per year.

£16.8 million a year or, over the 25 year lifespan of the programme some £420 million.

Which is more like £42,000 per household which isn\’t a good deal at all, is it?

Yes, I know, I\’ve ignored NPV, inflation, interest rates and all.

But there is the catch. It\’s not costing £100 million, it\’s costing multiples of that.

5 thoughts on “Ritchie likes it so where\’s the catch?”

  1. For how long are the feed-in tariffs guaranteed?
    I read somewher it is for 30 years but, recently, I read that the tariff will be reviewed in 2013.

    Spain (and ?Germany) have reduced the tariff and if this government does the same there will be some shocks for those buying PV cells.

  2. I thought you must be wrong, surely they’re just putting solar panels on council houses, reducing the fuel bills. But I see here http://www.finditinbirmingham.com/Info/the%C2%A0proposition%C2%A0to%C2%A0customers-159.aspx that one of the benefits is to, “Secure a tangible long-term income stream (which might in some cases be used to finance loans to pay for the initial property improvements) ”

    And obviously the money is there, why wouldn’t a council try and use it to make their housing stock better?

    However, I don’t quite understand your position. The £100,000,000 is a loan to the householders, which is repaid using the income they generate by receiving the 45p a unit. So that initial sum’s not a cost to the tax-payer.

    Tim adds: None of it is a cost to the taxpayer. It’s all a cost to “other energy users” through the feed in tariff. And that cost is the (undiscounted) £420 million, not the headlined £100 million.

  3. The missing link here is that solar PV will not provide 4.8MWh per household per year . Assuming the costs are correct, they expect the panels to produce about 1.1MWh per household per year.

  4. I got an investment prospectus through the post talking about how FITs are index-linked guaranteed for 25 years. Is this true? What’s the catch? Because right now investing in these yields a lot more than linker gilts, and I’d like some of that please..

    Tim adds: Well, to the extent that you can rely upon such a “guarantee” yes. Both Spain and Germany have recently realised that they’ve been too generous and cut the rates on offer.

    I’ve heard (but cannot confirm) that there will be a review of rates in 2013 in the UK….

  5. I actually had to do this math for real when considering an off grid house.
    Best I could do was 10k€ per kwh for solar plus battery storage to match demand/supply. (Wind’s similar & we considered a mix appropriate)
    40-50k€ for a liveable house seemed about ballpark & wasn’t far off the connection costs to the nearest grid supply for this particular location.
    That was installing it all myself.
    Professional install? Don’t know. Double it?

    However this IS southern Spain. We actually GET sun most the year. It’s 28 here as I write. UK? P*ssing down at the moment isn’t it?

Leave a Reply

Your email address will not be published. Required fields are marked *