UK Solar to Benefit from New Competitive Tariff
by Sami Grover, Carrboro, NC, USA on 12.10.07
The incredible rate at which the solar industry is growing has often been a topic of discussion on TreeHugger. Often the debate has revolved around the economics of solar, with the numbers looking increasingly favorable for us little people. Now UK-based renewable energy enthusiasts, already bolstered by the government’s ambitious wind energy targets announced over the weekend, will be pleased to hear that Scottish and Southern Energy plc has announced a new, extremely competitive tariff for householders and small businesses using solar energy. The tariff not only offers a good price for energy exported to the grid, but it also aims to greatly simplify the process of producing energy and getting paid for it, as many owners of solar energy systems have not been taking advantage of the income from Renewables Obligation Certificates (ROCs) that they are entitled to, due to the perceived complexity of the system.
Under the terms of Solar Energyplus, as the utility is calling it, in addition to buying from, and selling energy to, the customer, Scottish and Southern Energy will also install the export meters, act as the ROC agent and seek ROC accreditation for customers free of charge. Jeremy Leggett, CEO of Solarcentury welcomed the move as a clear step forward for competitive pricing of solar energy:
"SSE has demonstrated true business leadership in the fight against climate change, their new solar tariff will make a substantial difference to the UK solar industry and solar customers alike. A financial incentive for clean local energy production is common across Europe with a fixed feed in tariff, however it does not exist in the UK. In improving the financial case for solar, SSE now provides a market leading service in this country. We applaud their foresight and generous support for the micro-generation sector, as photovoltaics becomes a crucial element in delivering a low carbon future. The new tariff not only sets a precedent for other electricity suppliers, but is essential for the commercial success of a decentralised energy market."
For more thoughts on cleaning up your energy supply, check out our guide on How to Green Your Electricity. :: Scottish and Southern Energy PLC::via Solarcentury::
More great news coming out of the UK. Wonderful news! A great boost to wind and another great boost to solar.
It will be interesting to see how this changes the pay back time/ROI estimates for solar PV in the UK. I would install PV if I had the spare cash purely for the nerdish joy of being able to generate my own electricity but I'm sure there is a substantial, more financially astute, section of the population who will leap on solar PV the moment it actually looks like an investment with reasonable pay-back times. At the moment the UK housing market is so fluid, with many seeing their homes as investments and not just places to live in, that it is normal to move every couple of years or so. Investing circa £10K on a solar PV installation that you can't take with you and which you won't see a return on for 20 years, is a real disincentive to solar uptake.
"At the moment the UK housing market is so fluid, with many seeing their homes as investments and not just places to live in, that it is normal to move every couple of years or so. Investing circa £10K on a solar PV installation that you can't take with you and which you won't see a return on for 20 years, is a real disincentive to solar uptake."
That assumes that the value of such an installation won't be reflected in the resale value of your home. It seems to me that an installation that provides acreasonable payback is going to add some value to a home.
Payback has to be high, however, as it has to be compared with the opportunity cost of investing the money pursuant to some competitive financial product and taking into account that the solar system is a depreciating asset. A system that costs £10K should be producing more than £1K worth of electricity per annum for it to be cost effective. I doubt that this is so at present.
I'm still not sure I fully appreciate the rational for every country feeling as if they need to subsidize all forms of renewable energy. It's a very high tariff precisely because England, and Scotland even more so, get significantly less annual sun than much of the world.
These same panels being installed in the UK would generate almost double the amount of green electricity if they were located around the Mediterranean (Spain, Southern France, Italy, Greece or Turkey) or in the U.S. Southwest. Why does it not make sense to focus tariff subsidies on the technologies that are most cost effective for a particular location?