Evidence #1:

Discussions with PV installers and local groups indicate customers would not proceed with the amended tariff rates. Installers predict a collapse of the market which would have an impact on jobs and the industry in general.

However, the situation is not as clear as it could be. Panel prices have dropped, and the FIT mechanism is encouraging profiteering at the expense of the consumer and detriment of bleeding dry the monies set aside for the FIT.

Evidence #2:

The impact to jobs is happing at a national level – see Carillion takes £20m hit on FITs lay-offs. However, this may be more to the economic climate as compared to the effect of the FIT.

Evidence #3:

Page 3 of document 3364 quotes “5% for well located installations” for the intended ROI for PV – however, the launch of FITs quoted 5 -8% and has been well establish as such since April 2010. Additionally the Minister has also quoted 5 to 8% criteria. The document is not as transparent as it should be on this point.

PROPOSAL

An alternative mechanism for providing an equitable return on investment that meets the Minister’s criteria & market expectations can be achieved by capping the FiT to a specific capital cost / performance price point, reducing the FiT as the Capital cost / performance reduces, and reducing the cap on a regular (quarterly?) basis. This achieves the vision outlined above :-

1.       More inefficient / costly panels will have a lower ROI and longer payback period. This encourages customers to look for better cost performance panels, which in combination of a regularly reduced price performance cap, will apply market pressure to encourage manufacturers to reduce costs and invest in improvements to increase panel efficiency.

The issue about the lack of research was raised by George Monbiot – he suggested that the monies provided for the FiT could have been better spent through research to improve the efficiency of panels. Such improvements are slow in coming (PVT for example has a much higher efficiency rate as a result of the water cooling technology incorporated into the panels.) In the author’s opinion, a gradual reduction of the FiT linked to cost performance softens the impact on the market and, with sufficient communication from the government, should send a message to manufactures that cost reductions are required.

2.       Tiered FiT based on capital price performance provides a more equitable distribution of FiT monies which is more socially acceptable and “better value for money” i.e. cheaper panels generating the same amount of power should still only result in a 5 to 8% ROI and 10 to 12 year payback. This avoids accusations of a system that encourages profiteering and takes into account dynamic market changes.

Such an approach reduces the risk of exhausting FiT funding earlier than expected.

3.       Additionally, tiered FiT as previous described encourages consumers to shop for lower priced systems (taking into account reliability and long term performance), and aids competition encouraging manufacturers to achieve better price performance. (note, panels from China benefit from their fixed exchange rate – no easy answer to that one, unfortunately)

4.       Capping the FiT to a specific capital price performance point would require installers to be more transparent about their pricing. Prices above the Capped FiT would not achieve the ROI and Payback period. We have already seen evidence of customers being ripped off with panels priced significantly higher than the real price.  Better transparency should help reduce excessive profiteering from cowboy installers.

5.       The consultation document raises the issue of “value for money” which is assumed to be the additional levy applied to householder bills to support the FiT. In order to test “value for money” we have contacted a local electricity supplier, Utilita (and one query outstanding from British Gas). Their calculation resulted in £0.72p ex Vat per customer per year which is excellent value for money.

A detailed description of the calculation used for a tiered approach to FiT is in appendix A.

This impacts customers who have paid a deposit, and installers where the deposit has been used as a down payment to secure the capital equipment. This is a high risk that this deposit is non-refundable in these circumstances even through the original assessment was based on current FiT payments. It may also impact the installer who may have ordered and paid for equipment up front.

Proposals and agreements that have been based a reference date of April 2012 – the original date for changing the FiT, may force contract issues.

A date earlier than the close date for the consultation brings into question the credibility of the consultation process.

If the policy is to only attract householders, then the tiered scheme as described in #1 would need to be lowered for multi-installations.

HOWEVER this then excludes the possibility of a Non Profit Community Interest Company providing an investment vehicle for community members that are unable to install PV on their property. i.e. A CIC that raises funds from community members could install PV on households that are appropriately orientated and also suffering from fuel poverty. The benefits of a community based scheme of this type are:-

• Fuel poverty households save on their electricity bills.

• Other community members unable to install PV receive a return on their investment which also help other community members.

• The CIC receives a small income for managing the scheme and profits can be recycled into other schemes.

We think community based schemes encouraging householders, and non-profit organisations should be excluded from the multi-installation tariff rates. In fact, to encourage schemes of this type (where economies of scale can be achieved through bulk buying), the graduated tariff as described in appendix A should be increased to obtain a higher than 7.6% return on investment.

An additional requirement of a community based scheme would require investors to sign up to a EPC C rating..

Agree

For schemes that are not community based we agree with this proposal.

A full assessment should be done (as required by the Green Deal, which should include all measures needed to meet the 80% 2050 target) and a subset of measures identified from the assessment such that a minimum energy efficiency level is met and does not include the energy saved from PV. Addition of PV then exceeds the minimum applied to building.

This should be applied to dwellings and non-domestic buildings – we need to meet the UK statutory carbon targets.  However, there are exceptions such as farm buildings where measures may not be applicable, in which case, another building should be identified upon which measures can be applied and subsequently implemented.

A full assessment should be done (as required by the Green Deal, which should include all measures needed to meet the 80% 2050 target), and those measures identified & potentially financeable under the Green Deal to be implemented within 1 year from the installation of the PV, UNLESS it makes sense to install some of the measures before the PV is installed. In this case, the customer may need to take out a loan. If these measures are installed before the Green Deal, then the customer should have the option of subsequently financing them from the Green Deal and pay off the loan used to implement the early changes.

Applicable to both dwellings and non-domestic buildings with exceptions (see 6).

Will a level C achieve our carbon targets? Someone more knowledgeable needs to determine the correct level required in order to meet UK’s legal binding targets and long term 2050 target. I doubt a level C will meet those targets (assuming good behaviour change).

PV installations should be conditional on energy efficiency changes within a given period.

Trust is a difficult thing to build and easily lost. Events such as Hips, the revised tariff on >50KW PV systems, and now this potentially puts the credibility of RHI and the Green Deal at risk.

7.60%

9.50%